THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION The definitions and interpretations commencing on page 4 of this Circular apply to this entire document, including the cover page, except where the context indicates a contrary intention. Action required by certificated and dematerialised shareholders This document should be read in its entirety with particular attention to the section entitled “Action Required by Stellar Capital Shareholders”, which commences on page 9 of this Circular. If you are in any doubt as to what action you should take, please consult your stockbroker, banker, legal adviser, CSDP or other professional adviser immediately. If you have disposed of all your Stellar Capital shares, this Circular should be handed to the purchaser of such Stellar Capital shares or to the stockbroker, banker, CSDP or other agent through whom the disposal was effected. Stellar Capital does not accept responsibility, and will not be held liable, for any action of, or omission by, any CSDP or stockbroker including, without limitation, any failure on the part of the CSDP or stockbroker of any beneficial owner of Stellar Capital shares to notify such beneficial owner of the Transaction set out in this Circular. The Transaction results in a reverse takeover for Stellar Capital, accordingly, shareholders are cautioned that the Transaction will be subject to the JSE confirming that Stellar Capital complies with all the requirements for a new listing on the Main Board of the JSE as an investment holding entity.
Stellar Capital Partners Limited (Previously ConvergeNet Holdings Limited) (Incorporated in the Republic of South Africa) (Registration number 1998/015580/06) (“Stellar Capital” or the “Company”) Share code: SCP ISIN: ZAE000198586
CIRCULAR TO STELLAR CAPITAL SHAREHOLDERS
Regarding • the proposed acquisition by Stellar Capital of 34.62% of the issued share capital of Torre for an aggregate amount of R910,391,385 which will result in a reverse takeover for Stellar Capital; and incorporating: • Revised Listing Particulars; and enclosing: • a notice of General Meeting; and • a form of proxy in respect of the General Meeting (for use by certificated shareholders and dematerialised shareholders with “own name” registration only).
Corporate Finance Adviser Independent Reporting Independent Sponsor and Transaction Sponsor Accountants and Auditors to Stellar Capital
Date of issue: 4 September 2015 This Circular is only available in English. A copy hereof may be obtained from the registered offices of Stellar Capital, the address of which appears in the section “Corporate Information and Advisers” on the inside front cover of this Circular, from Friday, 4 September 2015 until Friday, 16 October 2015. This Circular is also available on the Company’s website (www.stellarcapitalpartners.co.za ). CORPORATE INFORMATION AND ADVISERS
Company Secretary Directors
The Secretarial Company DD Tabata (Chairman)*# c/o Caroline du Preez PJ van Zyl (Chief Executive Officer) Empire Park, 55 Empire Service Road CB de Villiers (Chief Financial Officer) Parktown CE Pettit*# (PO Box 213, Mulbarton, 2059) L Mangope*# J de Bruyn*# CC Wiese*# CH Wiese*#
*Non-executive # Independent Corporate Finance Adviser and Sponsor Independent Sponsor to Stellar Capital
Stellar Capital Advisers Proprietary Limited Questco Proprietary Limited (previously AfrAsia Corporate Finance Proprietary (Registration number 2002/005616/07) Limited) Entrance D, 2nd Floor (Registration number 2007/015289/07) The Pivot Office 202, Cape Quarter, The Square 1 Montecasino Boulevard 27 Somerset Road Fourways, 2055 Green Point (PO Box 98956, Sloane Park, 2152) Cape Town, 8005 (Suite 54, Dixon Street, Cape Town, 8001)
And at
Level P3, Oxford Corner Cnr Jellicoe and Oxford Road Rosebank Johannesburg, 2196 (Suite 54, Dixon Street, Cape Town, 8001)
Independent Reporting Accountants and Transfer Secretaries Auditors Computershare Investor Services Proprietary Grant Thornton Cape Incorporated Limited (Registration number 2010/016204/21) (Registration number 2004/003647/07) 119 Hertzog Boulevard Foreshore Ground Floor, 70 Marshall Street Cape Town, 8001 Johannesburg, 2001 (PO Box 7483 / 7498, Roggebaai, 8012) (PO Box 61051, Marshalltown, 2107)
TABLE OF CONTENTS
The definitions and interpretations commencing on page 4 of this Circular shall apply, mutatis mutandis, to this section.
Page Corporate information and advisers Inside front cover Table of contents Salient dates and times 2 Important legal notes 3 Definitions and interpretation 4 Action required by Stellar Capital shareholders 9 Circular to Stellar Capital shareholders 11 1. Introduction 11 2. Purpose of this Circular 11 3. The Transaction 12 4. Reverse Takeover 13 5. Pro-Forma Financial Effects of the Transaction 13 6. Expenses relating to the Transaction 16 7. Irrevocable Undertakings 16 8. Financial information incorporated by reference 16 9. Adequacy of working capital 17 10. Material Borrowings 17 11. Exchange Control Regulations 18 12. Directors and senior management 19 13. Directors’ interests in securities 20 14. Directors’ interests in transactions 21 15. Directors’ and management remuneration 21 16. Major beneficial shareholders 22 17. Share capital 22 18. Share price history 24 19. Litigation statement 24 20. Material changes 24 21. Material and service contracts 24 22. Advisers’ consents 25 23. General Meeting 25 24. Directors’ responsibility statement 25 25. Director’s Opinion 25 26. Documents available for inspection 26
Annexure 1 Pro forma financial effects of the Transaction 27 Annexure 2 Independent Reporting Accountants’ limited assurance report on the pro forma financial effects of the Transaction 33 Annexure 3 Details of Previous Vendors 35 Annexure 4 Curricula vitae of the directors of Stellar Capital and senior management of major subsidiaries 37 Annexure 5 Previous issues of Stellar Capital shares 39 Annexure 6 Share price history of Stellar Capital 40
Annexure 7 Material contracts and transactions of Torre 42 Revised Listing Particulars Attached
Notice of General Meeting Attached Form of Proxy – General Meeting (for use by certificated shareholders and dematerialised shareholders with “own name” registration only) Attached
1 SALIENT DATES AND TIMES
The definitions and interpretations commencing on page 4 of this Circular shall apply, mutatis mutandis, to this section. GENERAL MEETING 2015 Record date in order to be eligible to receive the Notice of General Meeting Friday, 28 August Posting of Circular and Notice of General Meeting published on SENS on Friday, 4 September Circular and Notice of General Meeting posted to shareholders on Friday, 4 September Last date to trade in Stellar Capital shares in order to be recorded in the register to vote at the General Meeting on Friday, 9 October Voting Record Date by close of trade on Friday, 16 October Last date to lodge forms of proxy in respect of the General Meeting by 10:00 on Monday, 19 October General Meeting to be held at 10:00 on Wednesday, 21 October Results of General Meeting released on SENS on Wednesday, 21 October Notes 1. All times indicated in this Circular are local times in South Africa. 2. The dates and times indicated in the table above are subject to change. Any such changes will be released on SENS and published in the press. 3. Share certificates in the name of Stellar Capital will not be able to be rematerialised or dematerialised between Monday, 12 October 2015 and Friday, 16 October 2015 both days inclusive. 4. To be valid, the completed forms of proxy must be lodged with the Transfer Secretaries by no later than Monday, 19 October 2015 at 10:00, alternatively, such forms of proxy may be handed to the Company Secretary or chairperson of the Company at the meeting until the commencement of the General Meeting.
2 IMPORTANT LEGAL NOTES
The definitions and interpretations commencing on page 4 of this Circular shall apply, mutatis mutandis, to this section. APPLICABLE LAWS The release, publication or distribution of this Circular in certain jurisdictions may be restricted by law and therefore persons in any such jurisdictions into which this Circular is released, published or distributed should inform themselves about and observe such restrictions. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. This Circular does not constitute the solicitation of an offer to purchase shares or a solicitation of any vote or approval in any jurisdiction in which such solicitation would be unlawful. The Transaction may be affected by the laws of the relevant jurisdictions of nonresident shareholders. Such nonresident shareholders should inform themselves about and observe any applicable legal requirements of such jurisdictions. It is the responsibility of any nonresident shareholder to satisfy himself as to the full observance of the laws and regulatory requirements of the relevant jurisdiction in connection with the Transaction, which is the subject of this Circular, including the obtaining of any governmental, exchange control or other consents or the making of any filings which may be required, the compliance with other necessary formalities, the payment of any issue, transfer or other taxes or other requisite payments due to such jurisdiction. The Transaction is governed by the laws of South Africa and is subject to any applicable laws and regulations, including the Companies Act. Any shareholder who is in doubt as to their position, including, without limitation, their tax status, should consult an appropriate independent professional adviser in the relevant jurisdiction without delay. FORWARD-LOOKING STATEMENTS This Circular contains statements about the Company’s group of companies that are, or may be, forward– looking statements. All statements, other than statements of historical fact, are, or may be deemed to be, forward-looking statements. These forward-looking statements are not based on historical facts, but rather reflect current expectations concerning future results and events, and generally may be identified by the use of forward-looking words or phrases such as “believe”, “aim”, “expect”, “anticipate”, “intend”, “foresee”, “forecast”, “likely”, “should”, “planned”, “may”, “estimated”, “potential” or similar words and phrases. By their nature, forward-looking statements involve risks and uncertainties as they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions that forward-looking statements are not guarantees of future performance. Actual results, financial and operating conditions, liquidity and the developments within the industry in which the Company operates may differ materially from those made in, or suggested by, the forward-looking statements contained in this Circular. All of the forward-looking statements are based on estimates and assumptions, as regards the Company, made by the Company as communicated in publicly available documents by the Company, all of which estimates and assumptions, although the Company believes them to be reasonable, are inherently uncertain. Such estimates, assumptions or statements may not eventuate. Factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in those statements or assumptions include other matters not yet known to the Company or not currently considered material by the Company. Shareholders should keep in mind that any forward-looking statement made in this Circular or elsewhere is applicable only at the date on which such forward-looking statement is made. New factors that could cause the business of Stellar Capital not to develop as expected may emerge from time to time, and it is not possible to predict all of them. Further, the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement are not known. The Company has no duty to, and does not intend to, update or revise the forward-looking statements contained in this Circular after the date of this Circular, except as may be required by law.
3 DEFINITIONS AND INTERPRETATION
In this document, unless the context indicates a contrary intention, a word or an expression which denotes any gender includes the other gender, a natural person includes a juristic person and vice versa, the singular includes the plural and vice versa and the following words and expressions bear the meanings assigned to them below:
“beneficial owner” means a person on whose behalf any dematerialised share (not held in “own name” form) is held by a CSDP or stockbroker or a nominee of a CSDP or stockbroker in accordance with a custody agreement; “Board” or “directors” means the directors of Stellar Capital as at the Last Practicable Date, whose names are set out on page 19 of this Circular; “business day” means any day other than a Saturday, Sunday or official public holiday in South Africa; “Cadiz” means Cadiz Holdings Limited (registration number 1997/007258/06), a public company duly incorporated in accordance with the laws of South Africa, in which Stellar Capital owns a 17.31% interest (excluding treasury shares) as at the Last Practicable Date; “Cadiz Acquisition” means the proposed acquisition by Stellar Capital, acting through a special purpose vehicle, of a maximum additional 67,081,371 shares in Cadiz by way of a scheme of arrangement in terms of section 114(1) of the Companies Act, or failing which, by way of general offer to all Cadiz shareholders, through the issue of 41,925,857 Stellar Capital shares at R2.00 per shares, such that Stellar Capital will hold 43.74% of the issued ordinary shares in Cadiz as detailed in the announcement released on SENS on 19 June 2015 and in a combined scheme circular as posted on 31 August 2015; “cents” means South African cents, in the official currency of South Africa; “certificated shares” means shares that have not been dematerialised, the title to which is evidenced by a Document of Title; “certificated shareholders” means shareholders who hold certificated shares; “CIPC” means the Companies and Intellectual Property Commission; “Circular” means all the documents contained in this bound document dated 4 September 2015, together with the annexures hereto, and including the Notice of the General Meeting, the form of proxy and the Revised Listing Particulars; “common monetary area” means South Africa, the Republic of Namibia and the Kingdoms of Lesotho and Swaziland; “Companies Act” means the Companies Act, No. 71 of 2008, as amended, and where appropriate in the context includes a reference to the Companies Regulations; “Companies Regulations” means the Companies Regulations 2011, promulgated in terms of section 223 of the Companies Act (which include the Takeover Regulations); “Company Secretary” means Mrs Caroline du Preez; “Consideration Shares” means 390,086,494 ordinary shares in Stellar Capital to be issued at R2.00 per share in respect of the Transaction; “CSDP” means a “Participant”, as defined in section 1 of the Financial Markets Act; “custody agreement” means a custody mandate agreement between a person and a CSDP or stockbroker, regulating their relationship in respect of dematerialised shares held on Stellar Capital’s uncertificated securities register administered by a CSDP or stockbroker on behalf of that person;
4 “dematerialised” means the process whereby paper share certificates or other Documents of Title are replaced with electronic records of ownership of shares or securities as contemplated in section 49(5) of the Companies Act under the Strate system with a CSDP or stockbroker; “dematerialised shares” means shares that have been dematerialised or have been issued in dematerialised form, and which are held in electronic form on Stellar Capital’s uncertificated securities register administered by a CSDP; “dematerialised shareholders” means shareholders who hold dematerialised shares; “Digicore” means Digicore Holdings Limited (registration number 1998/012601/06), a public company duly incorporated in accordance with the laws of South Africa, which is listed on the main board of the JSE, in which Stellar Capital owns a 19.26% interest as at the Last Practicable Date; “Digicore Adjustment” means the upward purchase price adjustment required in respect of 38,692,770 Digicore Scheme Shares through the issue of 36,758,132 new Stellar Capital shares at an issue price of R2.00 as outlined in paragraph 5.4.3 of the acquisition circular which was posted to Stellar Capital shareholders on 15 December 2014 detailing the terms of the initial acquisition of Stellar Capital’s Digicore Scheme Shares and the required price adjustment in the event that they were subsequently disposed of on or before 16 July 2015 at a price above R2.50; “Digicore Disposal” means the disposal by Stellar Capital of its Digicore Scheme Shares pursuant to the scheme of arrangement in terms of section 114(1) of the Companies Act, proposed by the board of Digicore to Digicore shareholders (including Stellar Capital), in terms of which, if implemented, Novatel Bidco will acquire 100% of the issued share capital of Digicore, including Stellar Capital’s Digicore Scheme Shares, at an offer price of R4.40 per Digicore share, or, if the scheme fails, in terms of the Substitute Offer as announced on 19 June 2015 and as detailed in a summary circular and full circular posted to Stellar Capital shareholders on 5 August 2015 and 18 August 2015 respectively; “Digicore Scheme Shares” means 47,692,770 ordinary shares in Digicore owned by Stellar Capital, constituting 19.26% of the total issued share capital of Digicore; “Documents of Title” means valid share certificates, certified transfer deeds, balance receipts or any other proof of ownership of Stellar Capital shares, reasonably acceptable to Stellar Capital; “Elephant Lifting Acquisition” means the acquisition by Torre of 100% of Elephant Lifting Proprietary Limited, (Registration number 1983/007900/07), for an aggregate purchase consideration of R180,000,000 settled by Torre through a combination of upfront and deferred payments in both cash and shares which became effective on 1 January 2015 and was a Category 2 acquisition for Torre in terms of the Listing Requirements; “Exchange Control means the Exchange Control Regulations, 1961, as amended, made in terms Regulations” of section 9 of the Currency and Exchanges Act, 1933 (Act No. 9 of 1933), as amended; “Financial Markets Act” means the Financial Markets Act, No. 19 of 2012, as amended from time to time; “General Meeting” means the general meeting of Stellar Capital shareholders to be held at 10:00 on Wednesday, 21 October 2015 at Level P3, Oxford Corner, cnr Jellicoe and Oxford Roads, Rosebank, Johannesburg, to consider and, if deemed fit, approve the resolutions required to implement the Transaction; “IFRS” means International Financial Reporting Standards;
5 “JSE” means the JSE Limited (registration number 2005/022939/06), a public company incorporated in accordance with the laws of South Africa and licensed as an exchange under the Financial Markets Act; “King III Code” means the King Report on Corporate Governance for South Africa 2009; “Last Practicable Date” means the last practicable date prior to the finalisation of this Circular; “Listings Requirements” means the Listings Requirements of the JSE in force as at the Last Practicable Date; “ManCo” means Thunder Securitisations Proprietary Limited (registration number 2010/021751/07), a limited liability private company duly incorporated in accordance with the laws of South Africa and wholly owned subsidiary of Stellar Investment Holdings, and is the management company of Stellar Capital in terms of the Management Agreement; “Management Agreement” means the agreement dated 8 December 2014 between Stellar Capital and ManCo in terms of which ManCo will manage the portfolio of the Company in accordance with Section 15 of the Listings Requirements, the salient terms of which are included in Appendix 2 to the Revised Listing Particulars; “Memorandum of means the Memorandum of Incorporation of the Company; Incorporation” “net asset value” means the value of the total assets (non-current assets plus current assets) minus total liabilities (non-current liabilities plus current liabilities). Assets include financial assets and liabilities include financial liabilities; “net tangible asset value” means the net asset value less the value of goodwill and other intangible assets; “notice of General Meeting” means the notice of General Meeting forming part of this Circular; “Novatel” means Novatel Wireless Incorporated (registration number 2614230), a public company incorporated in accordance with the laws of the State of Delaware, United States, the shares of which is listed on the National Association of Securities Dealers Automated Quotations (NASDAQ); “Novatel Bidco” means Novatel or such subsidiary of Novatel as it may nominate in writing to Digicore prior to Friday, 16 October 2015, being the Digicore scheme consideration record date, which was referred to in the firm intention announcement published on SENS on 19 June 2015; “ordinary share(s)” means ordinary shares of no par value in the share capital of Stellar Capital, which shares are listed on the JSE Main Board; “own name” dematerialised means dematerialised shareholders who/which have elected to have “own shareholders” name” registration; “Prime Rate” means the publicly quoted prime rate of interest (per cent per annum) as published by Standard Bank of South Africa Limited from time to time; “Purchase Consideration” means the aggregate purchase consideration of R910,391,385 payable by Stellar Capital in respect of the Transaction, which amount shall be settled partly in cash (in an amount equal to R130,218,397),and partly through the issue and allotment of the Consideration Shares; “Questco” or “Independent means Questco Proprietary Limited (registration number 2002/005616/07), Sponsor” a private company incorporated in accordance with the laws of South Africa and the appointed independent sponsor to Stellar Capital in respect of the Transaction; “Rand” or “R” means South African rand, the official currency of South Africa;
6 “register” means Stellar Capital’s share register, including all sub-registers; “Revised Listing Particulars” means revised listing particulars in respect of the Stellar Capital Group issued in accordance with sections 9.5(c) and 9.22 of the Listings Requirements and attached to this Circular; “Stellar Capital” or “Company” means Stellar Capital Partners Limited (registration number 1998/015580/06), a public company incorporated in accordance with the laws of South Africa on 7 August 1998, operating in conformity with its Memorandum of Incorporation and laws of South Africa, the shares of which are listed on the Main Board of the JSE and having its registered address at Level P3 Oxford Corner, corner of Jellicoe and Oxford Road, Rosebank, Gauteng, 2196; “Stellar Capital Group” or means Stellar Capital and its subsidiaries from time to time; “Group” “Stellar Investment Holdings” means Stellar Investment Holdings Proprietary Limited (registration number 2015/030465/07), a private company incorporated in accordance with the laws of South Africa, having its registered address at Office 202, Cape Quarter, 27 Somerset Road, Green Point and owned by Navy Sky Investments Proprietary Limited as to 30%, Lavender Sky 40 Proprietary Limited as to 32.5%, Ryan Wood Collier (or his nominee) as to 12.5% and Thunder Capital Proprietary Limited as to 25%; “SENS” means the Stock Exchange News Service, the news service operated by the JSE; “shareholders” or “Stellar means certificated and dematerialised registered holders of Stellar Capital Capital shareholders” shares; “shares” or “Stellar Capital means ordinary shares of no par value in the share capital of Stellar Capital; shares” “South Africa” means the Republic of South Africa; “Stellar Advisers” or means Stellar Advisers Proprietary Limited (previously AfrAsia Corporate “Corporate Finance Adviser” Finance Proprietary Limited) (registration number 2007/015289/07), an or “Transaction Sponsor” authorised financial services provider (FSP 32488), a private company incorporated in accordance with the laws of South Africa and the corporate finance adviser and transaction sponsor to Stellar Capital; “stockbroker” means any person registered as a broking member (equities) in terms of the rules of the JSE made in accordance with the provisions of the Financial Markets Act; “Strate” means Strate Proprietary Limited (registration number 1998/022242/06), a private company incorporated in accordance with the laws of South Africa, a registered central securities depository which is responsible for the electronic settlement system used by the JSE; “sub-register” means each of Stellar Capital’s sub-registers of members administered and maintained by CSDPs in electronic form; “subsidiary” means a subsidiary company, as defined in section 3 of the Companies Act; “Substitute Offer” means an offer made by Novatel Bidco to the shareholders of Digicore on the same terms as the scheme of arrangement proposed by the board of Digicore, in the event that the scheme fails and subject to shareholders holding not less than 90% of the issued ordinary shares of Digicore accepting the offer;
7 “Torre” means Torre Industries Limited (registration number 2012/144604/06 ), a public company incorporated in accordance with the laws of South Africa on 13 August 2012, the shares of which are listed on the Main Board of the JSE, having its registered address at 59 Merino Avenue, City Deep, Johannesburg, 2197; “Torre Sale Shares” means 175,365,614 ordinary shares in the issued share capital of Torre, constituting 34.62% of the issued ordinary shares of Torre; “Transaction” means the acquisition by Stellar Capital of the Torre Sale Shares for the Purchase Consideration, which acquisition requires the approval of Stellar Capital shareholders at the General Meeting; “Transfer Secretaries” or means Computershare Investor Services Proprietary Limited (registration “Computershare” number 2004/003647/07), a private company incorporated in accordance with the laws of South Africa and the Transfer Secretaries of Stellar Capital; “VAT” means Value Added Tax, levied in terms of the provisions of the Value-Added Tax Act No. 89 of 1991, as amended; “Vendor Consortium” means those existing Torre shareholders who accepted an offer to sell their respective Torre Sale Shares in terms of signed offer letters, which are available for inspection per paragraph 26 of the Circular, on the terms set out in paragraph 2 in the Circular, and the word “Vendor” shall be a reference to any one of them. None of the accepting shareholders are considered related parties to Stellar Capital; “Voting Record Date” means the date on which shareholders must be recorded in the register in order to attend, speak at and vote at the General Meeting, which date is expected to be Friday, 16 October 2015; and “VWAP” means volume weighted average price.
8 ACTION REQUIRED BY STELLAR CAPITAL SHAREHOLDERS
The definitions and interpretations commencing on page 4 of this Circular shall apply, mutatis mutandis, to this section. This Circular is important and requires your immediate attention. The action you need to take is set out below. If you are in any doubt as to what action to take, you should consult your stockbroker, banker, legal adviser, CSDP, accountant, attorney or other professional adviser. If you have disposed of your Stellar Capital shares, this Circular should be handed to the purchaser of such Stellar Capital shares or the stockbroker, banker, CSDP or other agent through whom the disposal was effected. Please take careful note of the following provisions regarding the action to be taken by shareholders. If you are in any doubt as to what action you should take, please consult your stockbroker, banker, legal adviser, CSDP or other professional adviser immediately. GENERAL MEETING A general meeting of shareholders will be held at 10:00 on Wednesday, 21 October 2015 at Level P3, Oxford Corner, cnr Jellicoe and Oxford Roads, Rosebank, Johannesburg, to consider and, if deemed fit, to approve, with or without modification, the resolutions required to implement the Transaction. A notice convening the General Meeting is attached to, and forms part of, this Circular. 1 IF YOU HAVE DEMATERIALISED YOUR STELLAR CAPITAL SHARES AND DO NOT HAVE “OWN- NAME” REGISTRATION 1.1 Voting at the General Meeting 1.1.1 If your dematerialised Stellar Capital shares are not recorded in your own name in the electronic sub-register of Stellar Capital, you should notify your duly appointed CSDP or stockbroker, as the case may be, in the manner and subject to the cut-off time stipulated in the custody agreement governing the relationship with your CSDP or stockbroker, of your instructions as regards voting your Stellar Capital shares at the General Meeting. If you have not been contacted, it would be advisable for you to contact your CSDP or stockbroker immediately and furnish them with your instructions. 1.1.2 If your CSDP or stockbroker does not obtain voting instructions from you, your CSDP or stockbroker will be obliged to act in accordance with the instructions contained in the custody agreement between you and your CSDP or stockbroker. 1.1.3 You must not complete the attached form of proxy. 1.2 Attendance and representation at the General Meeting 1.2.1 In accordance with the custody agreement between you and your CSDP or stockbroker, you must advise your CSDP or stockbroker if you wish to: 1.2.1.1 attend, speak and vote at the General Meeting; and/or 1.2.1.2 send a proxy (including the Chairman of the General Meeting) to represent you at the General Meeting. 1.2.2 Your CSDP or stockbroker should then issue the necessary Letter of Representation to you for you or your proxy to attend, speak and vote at the General Meeting.
9 2 IF YOU HAVE NOT DEMATERIALISED YOUR STELLAR CAPITAL SHARES OR IF YOU HAVE DEMATERIALISED YOUR STELLAR CAPITAL SHARES WITH “OWN-NAME” REGISTRATION 2.1 Voting, attendance and representation at the General Meeting 2.1.1 You may attend, speak and vote at the General Meeting in person (or, if you are a company or other body corporate, be represented by a duly authorised natural person). 2.1.2 Alternatively, you may appoint a proxy to represent you at the General Meeting by completing the attached form of proxy in accordance with its instructions and returning it to the Transfer Secretaries at Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), to be received by them no later than 48 hours before the commencement of the General Meeting, (or any adjournment of the General Meeting), excluding Saturdays, Sundays and official public holidays, being no later than 10:00 on Monday, 19 October 2015. 2.1.3 Alternatively, a form of proxy may be handed to the Company Secretary or Chairperson of the Company at the meeting until the commencement of the General Meeting. 2.1.4 If you wish to dematerialise your Stellar Capital shares, please contact your CSDP or stockbroker. Shareholders should note that it will take between 1 and 10 business day(s) to dematerialise your Stellar Capital shares through your CSDP or stockbroker. Shareholders that do not have a CSDP or stockbroker can contact any CSDP or stockbroker, or, alternatively, Computershare directly on (011) 370 5000, to dematerialise their Stellar Capital shares. Shareholders are advised that no facilities for electronic participation in the General Meeting will be made available.
10 Stellar Capital Partners Limited (Previously ConvergeNet Holdings Limited) (Incorporated in the Republic of South Africa) (Registration number 1998/015580/06) (“Stellar Capital” or the “Company”) Share code: SCP ISIN: ZAE000198586
DD Tabata (Chairman)*# PJ van Zyl (Chief Executive Officer) CB de Villiers (Chief Financial Officer) CE Pettit*# L Mangope*# J de Bruyn*# CC Wiese*# CH Wiese*# *Non-executive # Independent
CIRCULAR TO STELLAR CAPITAL SHAREHOLDERS
1 INTRODUCTION Shareholders are referred to the announcements released on SENS and published in the press on 6 July 2015 and 21 July 2015 respectively, which detailed, inter alia, the Board’s proposal that, subject to the fulfilment of certain conditions precedent, Stellar Capital acquire a strategic 34.62% interest in the share capital of Torre. 2 PURPOSE OF THIS CIRCULAR 2.1 The Purpose of this Circular is to provide shareholders with information regarding the Transaction. 2.2 The Transaction constitutes a reverse takeover for Stellar Capital under the Listings Requirements, consequently, Stellar Capital is required to issue this Circular disclosing full details of the Transaction and to obtain the requisite approval from Stellar Capital shareholders. In addition, Stellar Capital will be required to meet all the requirements of a new listing. 2.3 The General Meeting will be convened to allow Stellar Capital shareholders to consider and, if deemed appropriate, to approve, with or without modification, the resolutions required to implement the Transaction, as set out in the Notice of General Meeting. 2.4 The Transaction is not a related party transaction for the purposes of the Listings Requirements. 2.5 The accompanying explanatory material, opinions and information provided in this Circular and the annexures hereto are, unless otherwise specifically set out to the contrary, or appears from the context, solely those of Stellar Capital. Stellar Capital takes full responsibility for the contents of this Circular, the proposed resolutions and the accompanying explanatory material, opinions and information contained in this Circular. 2.6 The directors have evaluated the rationale for, and the terms and conditions of, the Transaction, and are of the opinion that the Transaction is consistent with the Company’s strategy, as detailed in the Revised Listings Particulars, and will enhance shareholder value. Accordingly, after due consideration, the directors, who are eligible to vote, are confident that value will be created for shareholders and unanimously recommend that Stellar Capital shareholders vote in favour of all the resolutions necessary to approve and implement the Transaction, as set out in the Notice of General Meeting.
11 2.7 The prospects for Torre in the short term will be influenced by the low levels of activity in the mining and industrial sectors in South Africa. However the Torre team have proven capability in terms of managing the business and allocating capital throughout the cycle and the composition of the underlying business units in Torre is broadly defensive. The long term prospects for the business are highly attractive as mining and industrial activity are expected to continue to grow in the markets in which Torre operates. 3 THE TRANSACTION 3.1 Overview During July 2015 Stellar Capital agreed terms with select Torre shareholders, the Vendor Consortium, for the acquisition by Stellar Capital of the Torre Sale Shares for the Purchase Consideration. 3.2 Business of Torre Torre was listed on the Main Board of the JSE by way of a ‘mirror listing’ on 26 November 2012. Torre is the holding company of a group of companies which specialises in the value added distribution of branded capital equipment and industrial consumable products, as well as the provision of specialised financial solutions to a diversified customer base across Africa. The Torre group of companies has a strong presence across South Africa and in 11 other African countries. Torre’s strategy is to become a predominantly Africa focused business and has identified significant growth opportunities on the continent. Torre has a proven strong track record with significant results since inception, and has created a diversified platform within the industrial sector that provides a sustainable and robust business model. 3.3 Rationale for the Transaction The Transaction presents an opportunity for Stellar Capital to grow a portfolio that is unconstrained by any particular market or sector through further diversification of its portfolio of assets and secures Stellar Capital the position of largest shareholder in an innovative business that operates in an industry that is expected to see significant growth going forward. Torre is operated by a strong and dynamic management team which Stellar Capital is confident is aligned with the vision of Stellar Capital. As its first dividend-paying asset, the Transaction represents an investment with the potential to generate strong gains for Stellar Capital shareholders and provides significant scale for Stellar Capital in terms of its current investments. At current share price levels, Stellar Capital believes that the Transaction offers unique future value for shareholders and allows Torre shareholders to access a premium to their current investment in Torre. 3.4 Salient Terms of the Transaction The Vendor Consortium entered into individual agreements with SCP based on the following terms: 3.4.1 The sale and transfer of their Torre Sale Shares for a consideration of 2.6 ordinary shares in Stellar Capital for every 1 Torre share held, to be settled through the issue of a maximum of 390 086 494 Stellar capital shares at an issue price of R2.00 per share which sale would expire on 31 October 2015 in the event conditions, as outlined in paragraph 3.5 below, are not fulfilled. 3.4.2 Stellar Capital approached the Vendor Consortium with the offer to acquire their Torre Sale Shares to be settled through the issue of shares in Stellar Capital. Two of the Vendors requested cash payments for their Torre Sale Shares, the details of which are detailed in 3.4.3 below. 3.4.3 In terms of the Transaction Stellar Capital will acquire not less than 34.62% unencumbered and freely transferrable Torre shares from the Vendor Consortium for the Purchase Consideration which shall be settled partly – 3.4.3.1 in cash, in an aggregate amount of R130,218,397, R122,450,370.72 of which is payable to Fahnsworth Consultants Limited (with interest accruing thereon at two percentage points above the Prime Rate from 1 September 2015) and R7,768,026.28 payable to D. Glockle; and
12 3.4.3.2 through the issue and allotment of the Consideration Shares to the remainder of the Vendor Consortium at an issue price of R2.00 per Consideration Share which represents a discount of less than 3% of the 30 day VWAP of a Stellar Capital share on 3 July 2015. 3.4.4 The Transaction will become effective the day on which all the conditions precedent detailed in paragraph 3.5 below are fulfilled which is currently anticipated to be 31 October 2015. 3.5 Conditions precedent 3.5.1 The Transaction is subject to the fulfilment of the outstanding conditions precedent that, by no later than 31 October 2015 - 3.5.1.1 all requisite Stellar Capital shareholder and regulatory approvals have been obtained from, inter alia, the JSE and the South African Reserve Bank, to the extent required, including any additional approvals required as a result of the implementation of the Transaction constituting a reverse takeover in terms of the JSE Listings Requirements. 3.6 Warranties Each of the Torre shareholders that comprise the Vendor Consortium have given the usual warranties in respect of their respective Torre Sale Shares. 4 REVERSE TAKEOVER The Transaction as assessed and categorised pursuant to the Listings Requirements will result in a percentage ratio of more than 100% and consequently Stellar Capital will be regarded as having undertaken a reverse takeover in accordance with section 9.5 of the Listings Requirements. Shareholders are cautioned that the Transaction will be subject to the JSE confirming that Stellar Capital complies with all the requirements for a new listing on the Main Board of the JSE as an investment holding entity. 5 PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTION 5.1 The table below sets out the pro forma financial effects of the Transaction (having taken the Cadiz Acquisition and the Digicore Disposal into account) on Stellar Capital. 5.2 The pro forma consolidated statement of comprehensive income for the six month period ended 31 May 2015 and pro forma consolidated statement of financial position at 31 May 2015 have been prepared for illustrative purposes only, based on current information available to management, in order to provide information about the financial effects of the Transaction on the financial position of the Company. Due to its nature, the pro forma financial information may not fairly present the Company’s financial position, changes in equity and results of operations or cash flows after the Transaction, and are based on the assumptions that: 5.2.1 for the purpose of calculating earnings per share and headline earnings per share, the Transaction was implemented on 1 December 2014; and 5.2.2 for the purpose of calculating net asset value per share and net tangible asset value per share, the Transaction was implemented on 31 May 2015. 5.3 The pro forma financial information has been prepared using the most recent financial period of the Company for the unaudited six month period ended 31 May 2015 in terms of the Listings Requirements and guidelines issued by the South African Institute of Chartered Accountants. 5.4 The accounting policies of Stellar Capital have been used in calculating the pro forma financial effects. The accounting policies used are consistent with previous accounting policies used by Stellar Capital and the accounting policies herein have been applied on the same basis. 5.5 The directors of the Company are responsible for the preparation of the pro forma financial information contained in this Circular.
13 5.6 The detailed pro forma financial information and notes thereto as a result of the Transaction is contained in Annexure 1 to this Circular. The Independent Reporting Accountants’ limited assurance report on the pro forma financial information is set out in Annexure 2 to this Circular.
Before After the Transaction Change (%)
Basic and diluted basic loss per ordinary share from continuing operations (cents) (2.83) (2.16) 75.69% Headline and diluted headline loss per ordinary share from continuing operations (cents) (2.48) (2.01) 76.13% Basic and diluted basic loss per ordinary share from discontinued operations (cents) (2.91) (1.27) 67.89% Headline and diluted headline loss per ordinary share from discontinued operations (cents) (1.27) (0.55) 67.89% Weighted and diluted weighted average number of shares 300 424 554 690 511 048 211.40% Number of shares in issue 361 469 917 751 556 411 165.77% Net asset value per share (cents) 195.40 197.79 4.64% Tangible net asset value per share (cents) 194.51 197.36 5.05%
Notes and assumptions: 1. The amounts set out in the “Before” column have been extracted from Annexure 1 of the circular to Stellar Capital shareholders dated 18 August 2015 which includes the pro forma financial effects effect of the Cadiz Acquisition and Digicore Disposal (as defined in this Circular) based on the unaudited interim results of the Company for the six months ended 31 May 2015, as published on SENS on 31 July 2015. 2. Shareholders are advised that the “Before” column as presented above differs from the “After the Digicore Disposal” column presented in the Company’s circular as mentioned in point 1 above in the following immaterial respects:
Disclosure Disclosure per Digicore per this Disposal Difference Reason for Line item Circular circular (cents) Difference Headline and (2.48) (2.83) 0.35 Inadvertent diluted headline omission of a loss loss per ordinary on the disposal share from of subsidiary in continuing the amount of operations R1.05 million from (cents) the calculation of headline loss from continuing operations in the Digicore Disposal circular.
14 Disclosure Disclosure per Digicore per this Disposal Difference Reason for Line item Circular circular (cents) Difference Headline and (1.27) (1.26) (0.01) Inadvertent diluted headline omission of the loss per ordinary tax effects of share from adjustments to discontinued the reconciliation operations between basic (cents) and headline loss from discontinued operations in the amount of R0.03 million from the calculation headline loss from discontinued operations in the Digicore Disposal circular.
The differences above have been assessed to be immaterial by management and as a result, no amendment was required to the Digicore Disposal circular. 3. The acquisition of 175,365,614 shares in Torre by way of the issue of 390,086,494 Stellar Capital shares at R2.00 per share and payment of approximately R130.2 million in cash, such that Stellar Capital will hold 34.62% of the issued ordinary shares in Torre. The investment in Torre has been accounted for at fair value of approximately R910.39 million (representing an average price of R5.19 per Torre share) in terms of IAS 39 par 14. The fair value of the Torre shares acquired has been determined by using the income approach supplemented by using the market approach as a reasonability check. The income approach fair value represents the value of Torre on a marketable non-controlling basis as at 30 June 2015, after adding the working capital excess and non-operating assets, and deducting non-operating liabilities and interest bearing obligations. The Transaction will be for a marketable, non-controlling stake. In determining the income approach fair value of Torre, a weighted average cost of capital range of between 12.8% and 13.4% was used, giving an indicative valuation range between R4.49 and R5.33 per Torre share. The market approach, which utilises the sustainable earnings of Torre and calculated market multiples of Torre comparables yielded a valuation range of between R4.81 and R5.39 per Torre share. Management is of the opinion that the valuation of R5.20 per Torre share reflects fair value based on the aforementioned considerations. The impact of the Transaction on the statement of financial position will be the recognition of an investment in Torre valued at R910.39 million, the payment of R130.2 million of cash in part settlement of the purchase consideration and the issue of 390,086,494 Stellar Capital shares at R2.00 per share resulting in an increase to share capital of R780.17 million. The impact of the Transaction on the statement of comprehensive income will be the recognition of transaction costs of R1.77 million as noted in paragraph 6 of this Circular and the recognition of management fees in the amount of R4.67 million resulting from the increase in net asset value of R780.17 million as calculated in terms of paragraph 3 of Appendix 2 of this Circular. The gross impact of the aforementioned on the statement of comprehensive income is the recognition of a R6.44 million loss from continuing operations, which loss is fully attributable to equity holders of the parent.
15 4. It has been assumed that the Transaction was implemented on 31 May 2015 for purposes of compiling the statement of financial position and on 1 December 2014 for purposes of compiling the statement of comprehensive income. 5. Tax consequences in relation to the Transaction have been taken into account. 6. All adjustments, other than transaction costs described above, will have a continuing effect. This is a direct result of the fact that the management fee expense is determined with reference to the net asset value of Stellar Capital in accordance with paragraph 3 of Appendix 2 of this Circular. As a result of this any change in the net asset value will have an impact on the management fee expense. 6 EXPENSES RELATING TO THE TRANSACTION The estimated expenses in respect of the Transaction (exclusive of VAT), including fees payable to professional advisers, are as follows:
Description Name R
Transaction Sponsor fees Stellar Advisers 1 200 000 Independent Sponsor Questco 100 000 Reporting accountants’ reports Grant Thornton 50 000 Printing, publication and distribution expenses Wounded Buffalo 56 861 JSE Documentation fees JSE 90 421 JSE Listing Fees JSE 212 200 Transfer secretarial fees Computershare 10 000 Contingency and sundry Other 50 000
Total 1 769 482
7 IRREVOCABLE UNDERTAKINGS Stellar Capital has received irrevocable undertakings from Stellar Capital shareholders holding approximately 56.37% of the votes exercisable and entitled to vote, to vote in favour of the Transaction and related resolutions to be proposed at the General Meeting in respect of its entire shareholding in Stellar Capital. The details of the shareholders who provided irrevocable undertakings are as follows:
Percentage Name of Shareholder Shareholding
Asgard Capital Assets Limited 8.89% Vre Investments (Pty) Ltd 10.50% ManCo 10% Green Tree Investments 306 (Pty) Ltd 4.68% Cream Magenta 140 (Pty) Ltd 4.95% Metcap 14 (Pty) Ltd 4.95% Wikalox Investments (Pty) Ltd 4.95% AfrAsia Special Opportunities Fund (Pty) Ltd 4.04% Kortrustfin (Pty) Ltd 1.84% Titan Nominees (Pty) Ltd 1.01% Titan Share Dealers (Pty) Ltd 0.56%
Total 56.37%
8 FINANCIAL INFORMATION INCORPORATED BY REFERENCE 8.1 The directors of Stellar Capital are responsible for the preparation and fair presentation of the financial information listed in paragraphs 8.1.1.1 and 8.1.1.2 below. In accordance with section 11.61 and 11.62 of the Listings Requirements, the following information can be accessed on the various websites as detailed below and is also available for inspection at the registered office of the Company and its sponsor by shareholders and/or prospective investors at no charge, during normal office hours from Friday, 4 September 2015 until Friday, 16 October 2015:
16 8.1.1 Historical financial information: 8.1.1.1 Historical financial information of Stellar Capital for the fifteen months ended 30 November 2014, year ended 31 August 2013, and year ended 31 August 2012, (full sets of which can be accessed on the Company’s website at www. stellarcapitalpartners.co.za); 8.1.1.2 Interim financial information of Stellar Capital for the six months ended 31 May 2015, (the full set of which can be accessed on the Company’s website at www.stellarcapitalpartners.co.za); 8.1.1.3 Historical financial information of Torre for the years ended 30 June 2014, 30 June 2013 and 30 June 2012 (the full sets of which can be accessed on Torre’s website at www.torreindustries.com and on Stellar Capital’s website at www.stellarcapitalpartners.co.za); and 8.1.1.4 Interim financial information of Torre for the six months ended 31 December 2014 (the full sets of which can be accessed on Torre’s website at www.torreindustries.com and on Stellar Capital’s website at www. stellarcapitalpartners.co.za). 8.2 Shareholders ought to note that the historical financial information incorporated by reference in this Circular, contain a general review of and provide commentary around the business and operations of the respective companies. 9 ADEQUACY OF WORKING CAPITAL 9.1 The directors of Stellar Capital have considered the impact of the Transaction and are of the opinion that: 9.1.1 the Stellar Capital Group will be able, in the ordinary course of business, to pay its debts for a period of 12 months after the date of approval of this Circular; 9.1.2 the assets of the Stellar Capital Group will be in excess of its liabilities for a period of not less than 12 months after the date of approval of this Circular, where for this purpose, the assets and liabilities are recognised and measured in accordance with the accounting policies used in the latest audited consolidated annual financial statements of the Company which comply with the Companies Act; 9.1.3 the share capital and reserves of the Stellar Capital Group will be adequate for ordinary business purposes for a period of not less than 12 months after the date of approval of this Circular; and 9.1.4 the working capital of the Stellar Capital Group will be adequate for ordinary business purposes for a period of not less than 12 months after the date of approval of this Circular. 9.2 The working capital statement was prepared on the Stellar Capital Group, as enlarged by the Transaction and taking into account the Cadiz Acquisition and the Digicore Disposal. 10 MATERIAL BORROWINGS 10.1 As at the Last Practicable Date neither Stellar Capital nor any of its subsidiaries in the Stellar Capital Group have any material borrowings. 10.2 The borrowing powers of the Company exercisable by the directors and the manner in which such borrowing powers may be varied are set out in clause 38 of the Memorandum of Incorporation, an extract of which is included in Appendix 4 to the Revised Listing Particulars. The borrowing powers have not been exceeded during the previous three years. 10.3 As at the Last Practicable Date neither Torre nor any of Torre’s subsidiaries have any material borrowings.
17 11 EXCHANGE CONTROL REGULATIONS 11.1 Foreign shareholders The Transaction may be affected by the laws of the relevant jurisdiction of a foreign shareholder. A foreign shareholder should acquaint itself with and observe any applicable legal requirements of such jurisdiction in relation to all aspects of this Circular that may affect it. It is the responsibility of each foreign shareholder to satisfy itself as to the full observance of the laws and regulatory requirements of the relevant jurisdiction in connection with the Transaction, including the obtaining of any governmental, exchange control or other consents, the making of any filings which may be required, the compliance with other necessary formalities and the payment of any taxes or other requisite payments due in such jurisdiction. The Transaction is governed by the laws of South Africa and is subject to any applicable laws and regulations, including the Exchange Control Regulations. Any shareholder who is in doubt as to its position, including, without limitation, its tax status, should consult an appropriate independent professional adviser in the relevant jurisdiction without delay. 11.2 Exchange control regulations The following is a summary of the Exchange Control Regulations. It is intended as a guide only and is not a comprehensive statement of the Exchange Control Regulations which apply to the Torre shareholders constituting the Vendor Consortium. Vendors who have any queries regarding the Exchange Control Regulations should contact their own professional advisers without delay. 11.2.1 Residents of the common monetary area In the case of: 11.2.1.1 Vendors with “own name” holding whose registered addresses in the Torre share register are within the common monetary area and whose relevant Torre Sale Shares are not restrictively endorsed in terms of the Exchange Control Regulations, will have their relevant Consideration Shares posted to them; or 11.2.1.2 Vendors whose relevant Torre Sale Shares are held by CSDPs or stockbrokers on their behalf as nominees and whose registered addresses in the sub- register managed by CSDPs or stockbrokers are within the common monetary area and whose accounts with their CSDP or stockbroker have not been restrictively designated in terms of the Exchange Control Regulations, will have their relevant Consideration Shares reflect in the account nominated for the relevant Vendor’s by their duly appointed CSDP or stockbroker in terms of the provisions of the custody agreement with their CSDP or stockbroker. 11.2.2 Emigrants from the Common Monetary Area 11.2.2.1 A Vendor holding dematerialised Torre Sale Shares who is an emigrant whose registration has been marked as an “emigrant” will have their relevant Consideration Shares credited to their emigrant blocked share accounts at the CSDP controlling their blocked portfolios. 11.2.2.2 A Vendor with certificated Torre Sale Shares who is an emigrant whose registered address is outside the common monetary area and whose relevant Torre Sale Shares have been restrictively endorsed under the Exchange Control Regulations will, against delivery of the Vendor’s relevant Torre Sale Shares, have their relevant Consideration Shares similarly endorsed “emigrant” and sent to the authorised dealer controlling the blocked assets of the emigrant Vendor. 11.2.2.3 In terms of a recent relaxation to the exchange control rulings, emigrants may externalise the consideration by making application to the Financial Surveillance Department of the South African Reserve Bank via the requisite authorised dealer channel. Previously, a 10% levy would have been payable on externalisation. This is however no longer the position and the consideration may, on application, be externalised free of the levy.
18 11.3 Non-residents of the Common Monetary Area A Vendor who is a non-resident of South Africa who is reflected as having a registered address outside the common monetary area and whose relevant Torre Sale Shares are in dematerialised form that have been restrictively endorsed under the Exchange Control Regulations will have its relevant Consideration Shares credited to the share account at the CSDP controlling the Vendor’s portfolio. A Vendor who is a non-resident of South Africa who is reflected as having a registered address is outside the common monetary area and whose relevant Torre Sale Shares are in certificated form that have been restrictively endorsed under the Exchange Control Regulations will have its Consideration Shares forwarded to the authorised dealer in foreign exchange in South Africa nominated by such holder. It will be incumbent on the Vendor concerned to instruct the nominated authorised dealer as to the disposal of the relevant Torre Sale Shares, against delivery of the relevant Consideration Shares. It will be incumbent on the Vendor concerned to instruct the nominated authorised dealer as to the acceptance of the Consideration Shares, against delivery of the relevant Torre Sale Shares. Should any cash consideration become payable to an emigrant or non-resident of South Africa, such amount will be forwarded to the authorised dealer in foreign exchange controlling such Vendor’s assets for credit to the Vendor’s blocked accounts. 12 DIRECTORS AND SENIOR MANAGEMENT 12.1 The directors of Stellar Capital are as follows:
Director Age Business Address Occupation Dumisani Dumekhaya 60 21B Impala Road, Attorney and Tabata*# (Chairman) Chistlehurston, Sandton, 2196 business person Peter John van Zyl 39 Office 202, Cape Quarter, The Chief Executive (Chief Executive Officer) Square 27 Somerset Road, Officer of Stellar Green Point, Cape Town, 8005 Capital
Charl Benjamin de Villiers 30 Office 202, The Square, Cape Chief Financial (Chief Financial Officer) Quarter, 27 Somerset Road, Officer of Stellar Green Point, Cape Town Capital
Charles Edward Pettit#*^ 34 Office 202, Cape Quarter, Chief Executive The Square 27 Somerset Road, Officer of Torre Green Point, Cape Town, 8005
Lerato Mangope*# 51 19 Fredman Drive, Director of Industrial Sandton, 2196 Development Corporation (“IDC”)
Janine de Bruyn*# 47 8 Windsor Road, Plumstead, Business consultant 7800 Caroline Clare Wiese*# 33 89 The Ridge, Fourth Beach, Business person Clifton, 8005 Christina Helmien Wiese*# 29 80A The Ridge, Fourth Beach, Business Clifton, 8005 development consultant
* Non-executive # Independent ^ British 12.2 A brief curriculum vitae for each of the Stellar Capital directors is set out in Annexure 4 to this Circular. 12.3 All the above directors, save for Charles Pettit who is British, are South African.
19 13 DIRECTORS’ INTERESTS IN SECURITIES 13.1 The direct and indirect beneficial interests of the directors and their associates in Stellar Capital shares pursuant to the implementation of the Transaction are set out in the table below:
Beneficial Director Direct Indirect Total Total %
Executive Directors PJ van Zyl - - - - CB de Villiers 109 800^ - 109 800 0.03%
Non-Executive Directors DD Tabata˜ - 1 082 658 1 082 658 0.38% CE Pettit - - - - L Mangope - - - - J de Bruyn - - - - CC Wiese# - 14 000 000 14 000 000 4.95% CH Wiese* - 14 000 000 14 000 000 4.95%
Total 109 800 29 082 658 29 192 458 10.31%
˜Reflects the effective shareholding held through Green Tree Investments 306 Proprietary Limited #Reflects the effective shareholding held through Metcap 14 Proprietary Limited *Reflects the effective shareholding held through Cream Magenta 140 Proprietary Limited ^19 800 shares will vest with effect from 31 December 2015 as announced on SENS on 18 August 2015, which shares have not been included in the above table 13.2 Information relating to the directors’ dealings in securities for the period from the last preceding financial year to the Last Practicable Date was published on SENS in accordance with section 3.63 to 3.74 of the Listings Requirements. For ease of reference, these are detailed as follows:
No. of shares Director Nature of trade Trade date Trade price traded C De Villiers Bonus shares 18 August R2.00 19 800 awarded by 2015 Stellar Advisers in respect of previous employment before being appointed as financial director of Stellar Capital Associate of Director Purchase 8 May 2015 R1.65 14 000 000 Associate of Director Purchase 8 May 2015 R1.65 14 000 000
20 14 DIRECTORS’ INTERESTS IN TRANSACTIONS None of the directors of Stellar Capital will benefit directly or indirectly as a consequence of the Transaction. None of the directors has or had any material interest, direct or indirect, in transactions that were effected by Stellar Capital during the current or immediately preceding financial year or during any earlier year and which remain in any respect outstanding or unperformed. 15 DIRECTORS’ AND MANAGEMENT REMUNERATION 15.1 Details of Stellar Capital directors’ remuneration, benefits and share options for the financial year ended 30 November 2014 was as follows:
Allowances Pension Fees for Basic and fringe and other Total Total Services salary benefits contributions Bonuses 2014 2013 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Paid by Company PJ van Zyl˜ 180 180 N/A CB de Villiers# N/A N/A N/A CE Pettit 190 190 185 DD Tabata 265 265 250 L Mangope 195 195 154 J de Bruyn^ 40 40 N/A CC Wiese* 30 30 N/A CH Wiese* 30 30 N/A NG Nika+ 100 100 150
1,030 1,030 739
Share based payment expense relating to directors 83
˜Peter van Zyl appointed 21 November 13 ^Janine de Bruyn appointed 25 July 2014 *Christina Wiese and Clare Wiese appointed 8 September 2014 #Charl de Villiers appointed with effect 1 February 2015 +Nkosemnthu Nika resigned 3 July 2014 15.2 Stellar Capital does not have a share or bonus scheme and none of the directors of the Stellar Capital Group have any share options. 15.3 The Transaction will not affect the directors’ capacity or remuneration.
21 16 MAJOR BENEFICIAL SHAREHOLDERS 16.1 Shareholders beneficially holding more than 5% of the total issued share capital of the Company (excluding shares held in treasury), directly or indirectly, prior to the implementation of the Transaction and taking into account the Cadiz Acquisition and Digicore Disposal are as follows:
% of issued share Number of capital of Shareholder shares held Stellar Capital
VRE Investments Proprietary Limited 29 702 228 8.22% ManCo 28 278 593 10.00% Asgard Capital Assets Limited 25 134 458 6.95%
TOTAL 83 115 279 25.17%
16.2 Set out below are the names of Stellar Capital shareholders who are expected to be beneficially interested in 5% or more of the issued shares of Stellar Capital pursuant to the implementation of the Transaction and having taken the Cadiz Acquisition and the Digicore Disposal into account:
% of issued share Number of capital of Shareholder shares held Stellar Capital
Asgard Capital Assets Limited 141 151 848 18.78% SJP Capital Limited 107 900 000 14.36% ManCo* 75 155 641 10.00% Investec Asset Management** 65 781 035 8.75% Titan Nominees Proprietary Limited 39 258 132 5.22%
TOTAL 429 246 656 57.11%*
* The increase in the number of shares held by the ManCo is from ManCo acquiring shares in the market from existing shareholders in order to ensure that a minimum 10% holding. ** Held on behalf of various discretionary and non-discretionary clients. 16.3 The information included in this paragraph 16 is based on the share register of the Company as per Strate and Computershare as at 17 July 2015, due to the share register closing on the last Friday of each month in line with Strate’s policies. 16.4 Insofar as it is known to the directors of Stellar Capital, there is no controlling shareholder of Stellar Capital as defined in the Listings Requirements. 17 SHARE CAPITAL 17.1 The authorised and issued share capital, before and after the Transaction (and taking the Cadiz Acquisition and Digicore Disposal into account), as at the Last Practicable Date, is shown below:
Share capital before the Cadiz Acquisition, Digicore Disposal and the Transaction Number of shares
Authorised share capital 1 000 000 000 ordinary shares of no par value* Issued share capital Stated capital 282 785 928 Treasury shares (40 000)
Total net issued share capital 282 745 928
22 Share capital after the Cadiz Acquisition Number of shares Authorised share capital 1 000 000 000 ordinary shares of no par value Increase in issued share capital Stated Capital: 41 925 857 shares issued pursuant to the Cadiz Acquisition 324 711 785 Treasury shares (40 000)
Total net issued share capital 324 671 785
Share capital after the Digicore Disposal Number of shares Authorised share capital 1 000 000 000 ordinary shares of no par value Increase in issued share capital Stated Capital: 36 758 132 shares issued pursuant to the Digicore Adjustment 361 469 917 Treasury shares (40 000)
Total net issued share capital 361 429 917
Share capital after the Cadiz Acquisition, Digicore Disposal and the Transaction Number of shares Authorised share capital 1 000 000 000 ordinary shares of no par value Increase in issued share capital Stated Capital: 390 086 494 shares issued pursuant to the Transaction 751 556 411 Treasury shares (40 000)
Total net issued share capital 751 516 411 17.2 Conversion rights, voting rights, rights to distributions and variation of rights 17.2.1 In accordance with the Memorandum of Incorporation, at any general meeting every member present in person or by proxy shall have one vote on a show of hands, provided that a proxy shall, irrespective of the number of members he represents, have only one vote. On a poll, every member present in person or by proxy shall have that proportion of the total votes in the Company which the aggregate amount of the nominal value of the shares held by that member bears to the aggregate of the nominal value of all the shares issued by the Company. 17.2.2 All of the shares are of the same class and rank pari passu in every respect. There are no conversion or exchange rights attached to such shares. Any variation in the rights attaching to the shares will require a special resolution of the shareholders in general meeting in accordance with the Memorandum of Incorporation and the provisions of the Companies Act. 17.3 Subdivision or consolidation of Stellar Capital shares Save for the consolidation of the authorised and issued share capital of the Company by the consolidation of every 10 shares with no par value into 1 share with no par value, which consolidation was approved by shareholders in general meeting on 22 October 2013, no further consolidations or sub-divisions have occurred in respect of Stellar Capital shares. 17.4 Options or preferential rights in respect of Stellar Capital shares There is no contract or arrangement, either actual or proposed, whereby any option or preferential right of any kind has been or will be given to any person to subscribe for any securities of Stellar Capital. 17.5 Issues and repurchases of shares Details of the repurchase of shares by Stellar Capital in the three years preceding the Last Practicable Date are set out in Annexure 5 to this Circular.
23 18 SHARE PRICE HISTORY The share price history of Stellar Capital’s shares on the JSE is summarised in Annexure 6 to this Circular. 19 LITIGATION STATEMENT 19.1 In terms of section 7.D.11 of the Listings Requirements, the directors, whose names appear under “Corporate Information and Advisers” on the inside cover of this Circular, are not aware of any legal or arbitration proceedings, including any proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the Stellar Capital Group or any of its subsidiaries’ financial position. 19.2 There are no legal or arbitration proceedings, including any such proceedings that are pending or threatened against the Torre Group, of which the Stellar Capital board of directors is aware, that may have or have had in the recent past (12 months from the Last Practicable Date), a material effect on the financial position of Torre or its subsidiaries. 20 MATERIAL CHANGES 20.1 Save for the Cadiz Acquisition and the Digicore Disposal, there have been no material changes in the financial or trading position of the Stellar Capital Group since Stellar Capital published its results for the six months ended 31 May 2015 and the date of this Circular. 20.2 Save for the Elephant Lifting Acquisition, there have been no material changes in the financial or trading position of Torre and its subsidiaries since it published its results for the six months ended 31 December 2014 up to and including the Last Practicable Date that Stellar Capital is aware of. 21 MATERIAL AND SERVICE CONTRACTS 21.1 Material Contracts There are no known material contracts or transactions entered into by Stellar Capital or any of its subsidiaries over the past two years preceding the date of this Circular, save for the material contracts and transactions detailed in Appendix 1 to the Revised Listing Particulars. Neither Stellar Capital nor any of its subsidiaries have entered into any agreement at any time which contains an obligation or settlement that is material to the Company or its subsidiaries at the date of this Circular. In addition, neither has Stellar Capital nor any of its subsidiaries entered into any agreements regarding restraint payments or technical fees. Save for the Elephant Lifting Acquisition and material contracts and transactions detailed in Annexure 7, no known material contracts and transactions were entered into by Torre over the past two years preceding this Circular, or other that contain any obligation and settlement that is material to Torre. In addition, Torre and its subsidiaries have not entered into any restraint payments or technical fees. No amounts have been paid, or are accrued as payable, or is proposed to be paid by Torre to any promoter, partnership or syndicate, other than in the normal course of business, during the three years preceding the date of this Circular. 21.2 Directors’ service contracts There are no service contracts in place in respect of the executive director and non-executive directors of the Company. 21.3 Other service contracts Caroline du Preez was appointed as company secretary to Stellar Capital with effect from 11 May 2015. A retainer arrangement is in place in relation to services rendered. No other service contracts have been entered into or amended within the six month period prior to the Last Practicable Date.
24 22 ADVISERS’ CONSENTS The advisers whose names appear in the section “Corporate Information and Advisers” on the inside cover of this Circular have all consented in writing to act in the capacities stated in this Circular and to their names being stated in this Circular and, in the case of the reporting accountants, reference to their report in the form and context in which they appear, and have not withdrawn their consent prior to the publication of this Circular. 23 GENERAL MEETING 23.1 The resolutions necessary to implement the Transaction will be put to a vote at the General Meeting to be held at Level P3, Oxford Corner, cnr Jellicoe and Oxford Roads, Rosebank, Johannesburg at 10:00 on Wednesday, 21 October 2015, or on any other date to which it may be postponed or adjourned. 23.2 Each certificated shareholder or “own name” dematerialised shareholder who is registered as such on the Voting Record Date, may attend, speak and vote at the General Meeting in person or be represented thereat by proxy. Forms of proxy must be received by the Transfer Secretaries by no later than 10:00 on Monday, 19 October 2015, in order to be valid, or provided to the Chairman before the commencement of the General Meeting. 23.3 Dematerialised shareholders, other than “own name” dematerialised shareholders, must give their instructions to their CSDP or stockbroker by the time and in the manner prescribed in the custody agreement concluded between the relevant dematerialised shareholder and their CSDP or stockbroker. If a dematerialised shareholder wishes to attend the General Meeting in person or be represented thereat by proxy, he must arrange with his CSDP or stockbroker to give him the necessary Letter of Representation to do so. Dematerialised shareholders, other than “own name” dematerialised shareholders, must not complete the form of proxy. 23.4 If you are a shareholder who wishes to address the General Meeting, then you will be given the opportunity to do so. 23.5 Shareholders are advised that no facilities for electronic participation in the General Meeting will be made available. 23.6 In terms of the Companies Act and the Listings Requirements, the votes of treasury shares will not be taken into account in determining the results of the voting at the General Meeting. 24 DIRECTORS’ RESPONSIBILITY STATEMENT The directors, whose names are set out on page 19 of this Circular, collectively and individually accept full responsibility for the accuracy of the information given in this Circular in relation to Stellar Capital and certify that, to the best of their knowledge and belief, no facts have been omitted which would make any statement in this Circular false or misleading, that all reasonable enquiries to ascertain such facts have been made and that this Circular contains all information required by law, the Listings Requirements and the Companies Regulations. 25 DIRECTORS’ OPINION The Board has considered the terms and conditions of the Transaction detailed in this Circular and recommend to shareholders to vote in favour of the Transaction. The directors, who are eligible to vote, intend voting in favour of the relevant resolutions.
25 26 DOCUMENTS AVAILABLE FOR INSPECTION 26.1 The following documents, or copies thereof, in addition to the information listed in paragraph 8, will be available for inspection by shareholders at Stellar Capital’s registered office and the offices of the Transaction Sponsor (the addresses of which appear in the section “Definitions and Interpretation” on page 4 and in the section “Corporate Information and Advisers” on the inside front cover of this Circular) during normal office hours from Friday, 4 September 2015 until Friday, 16 October 2015: 26.1.1 the Memoranda of Incorporation of Stellar Capital; 26.1.2 the Memoranda of Incorporation of Torre; 26.1.3 the signed offer letters in respect of each sale of Torre Shares by the Vendor Consortium to Stellar Capital; 26.1.4 the material contracts referred to in Appendix 1 of the Revised Listing Particulars attached to this Circular; 26.1.5 the signed consent letters of the advisers referred to in paragraph 22 of this Circular; 26.1.6 copies of the signed offer letters in respect of each sale of Torre Sale Shares by the Vendors comprising the Vendor Consortium; 26.1.7 the irrevocable undertakings referred to in paragraph 7 of this Circular; 26.1.8 copies of the published financial information of Torre as referred to in paragraph 8 of this Circular; and 26.1.9 a signed copy of this Circular.
SIGNED AT ROSEBANK ON BEHALF OF THE BOARD ON 2 SEPTEMBER 2015 IN TERMS OF POWERS OF ATTORNEY GRANTED BY THE DIRECTORS.
By order of the Board
STELLAR CAPITAL PARTNERS LIMITED PJ van Zyl Chief Executive Officer
4 September 2015
26 ANNEXURE 1
Pro forma financial effects OF THE TRANSACTION
• The table below sets out the pro forma financial effects of the Transaction, (taking into account the Cadiz Acquisition and the Digicore Disposal) on Stellar Capital. • The pro forma consolidated statement of comprehensive income for the six month period ended 31 May 2015 and pro forma consolidated statement of financial position at 31 May 2015 have been prepared for illustrative purposes only, based on current information available to management, in order to provide information about the financial results and position of the Company. Due to its nature, the pro forma financial information may not fairly present the Company’s financial position, changes in equity and results of operations or cash flows after the Transaction, and are based on the assumptions that: • for the purpose of calculating earnings per share and headline earnings per share, the Transaction was implemented on 1 December 2014; and • for the purpose of calculating net asset value per share and net tangible asset value per share, the Transaction was implemented on 31 May 2015. • The pro forma financial information has been prepared using the most recent financial period of the Company for the unaudited six month period ended 31 May 2015 in terms of the Listings Requirements and guidelines issued by the South African Institute of Chartered Accountants. • The accounting policies of Stellar Capital have been used in calculating the pro forma financial effects. The accounting policies used are consistent with previous accounting policies used by Stellar Capital and the accounting policies herein have been applied on the same basis. • The directors of the Company are responsible for the preparation of the pro forma financial information contained in this Circular. • The Independent Reporting Accountants’ limited assurance report on the pro forma financial information is set out in Annexure 2 to this Circular. Accounting policy with respect to Investments in Associates: In accordance with par 18 of IAS 28 “Investments in Associates and Joint Ventures”, the Company does not account for its investment in associates in the consolidated financial statements using the equity method. Instead, the Company has elected to measure its investments in these entities at fair value through profit and loss. The accounting policies of Stellar Capital have been used in calculating the pro forma financial effects. The accounting policies used are consistent with previous accounting policies used by Stellar Capital and the accounting policies have been applied on the same basis.
27 PRO FORMA STATEMENT OF COMPREHENSIVE INCOME OF STELLAR CAPITAL FOR THE SIX MONTHS ENDED 31 MAY 2015 The pro forma statement of comprehensive income set out below presents the pro forma financial effects of the unaudited results of Stellar Capital for the six months ended 31 May 2015 based on the assumption that the Transaction became effective on 1 December 2014.
Six months ended 31 May 2015 After the Before1, 2 Transaction6 Transaction Actual Pro forma Pro forma Continuing operations R’000 R’000 R’000
Fair value adjustments to investments (15 919) - (15 919) Interest income 8 753 - 8 753 Dividends received 9 - 9
Gross loss from investments (7 157) - (7 157) Other income 14 478 - 14 478 Finance costs (140) - (140)
Net loss before operating expenses 7 181 - 7 181 Management fee (4 537) (4 673) (9 210) Operating expenses (11 565) (1 769) (13 334)
Loss before taxation (8 921) (6 442) (15 363) Taxation 421 - 421
Loss from continuing operations (8 500) (6 442) (14 942)
Discontinued operations Net loss for the period from discontinued operations (8 747) - (8 747)
Other comprehensive income - - - Total comprehensive loss for the period (17 247) (6 442) (23 689) Loss attributable to: Equity holders of the parent (17 247) (6 442) (23 689) Non-controlling interests - - -
(17 247) (6 442) (23 689)
Loss from continuing operations attributable to: Equity holders of the parent (8 500) (6 442) (14 942) Non-controlling interests - - -
(8 500) (6 495) (14 942)
Loss from discontinued operations attributable to: Equity holders of the parent (8 747) - (8 747) Non-controlling interests - - -
(8 747) - (8 747)
28 Six months ended 31 May 2015 After the Before1, 2 Transaction6 Transaction Actual Pro forma Pro forma Continuing operations R’000 R’000 R’000
Reconciliation between basic and headline loss from continuing operations Basic loss attributable to equity holders of parent (8 500) (6 442) (14 942) Loss on disposal of subsidiary 1 048 - 1 048
Headline loss from continuing operations (7 452) (6 442) (13 894) Reconciliation between basic and headline loss from discontinued operations Basic loss attributable to equity holders of parent (8 747) - (8 747) Loss on disposal of property, plant and equipment 109 - 109 Loss on disposal of disposal group 4 847 - 4 847 Tax effect of adjustments (31) - (31)
Headline loss from discontinued operations (3 822) - (3 822)
Basic and diluted basic loss per ordinary share from continuing operations (cents) (2.83) (2.16) Headline and diluted headline loss per ordinary share from continuing operations (cents) (2.48) (2.01) Basic and diluted basic loss per ordinary share from discontinued operations (cents) (2.91) (1.27) Headline and diluted headline loss per ordinary share from discontinued operations (cents) (1.27) (0.55) Weighted and diluted weighted average number of shares 300 424 554 390 086 494 690 511 048
29 PRO FORMA STATEMENT OF FINANCIAL POSITION OF STELLAR CAPITAL AT 31 MAY 2015 The pro forma statement of financial position set out below presents the pro forma financial effects of Stellar Capital as at 31 May 2015 based on the assumption that the Transaction became effective on 31 May 2015.
Six months ended 31 May 2015 After the Before1, 2 Transaction6 Transaction Actual Pro forma Pro forma Continuing operations R’000 R’000 R’000
ASSETS Non-current assets Listed investments held at fair value 203 371 910 391 1 113 762 Unlisted investments held at fair value 100 119 - 100 119 Other financial assets 59 934 - 59 934 Deferred taxation 3 216 - 3 216
366 640 910 391 1 277 031
Current assets Other financial assets 113 870 - 113 870 Trade and other receivables 46 - 46 Cash and Cash Equivalents 215 364 (130 218) 85 146
329 280 (130 218) 199 062
Non-current assets held for sale - - - 329 280 (130 218) 199 062
TOTAL ASSETS 695 920 780 173 1 476 093
EQUITY AND LIABILITIES Total equity Shareholders’ equity 705 469 780 173 1 485 642 Non-controlling interest (14 221) - (14 221)
691 248 780 173 1 471 421
Liabilities Non-current liabilities Other financial liabilities - - - Deferred taxation - - -
Current liabilities Trade and other payables 4 672 - 4 672
4 672 - 4 672
Non-current liabilities held for sale - - - Total Liabilities 4 672 - 4 672
TOTAL EQUITY AND LIABILITIES 695 920 780 173 1 476 093
Number of shares in issue 361 469 917 390 086 494 751 556 411 Treasury (432 221) - (432 221) Net shares 361 037 696 390 086 494 751 124 190 Net asset value per share (cents) 195.40 197.79 Tangible net asset value per share (cents) 194.51 197.36
30 Notes and assumptions: 1. The amounts set out in the “Before” column have been extracted from Annexure 1 of the circular to Stellar Capital shareholders dated 18 August 2015 which includes the pro forma financial effects effect of the Cadiz Acquisition and Digicore Disposal (as defined in this Circular) based on the unaudited interim results of the Company for the six months ended 31 May 2015, as published on SENS on 31 July 2015. 2. Shareholders are advised that the “Before” column as presented above differs from the “After the Digicore Disposal” column presented in the Company’s circular as mentioned in point 1 above in the following immaterial respects:
Disclosure per Digicore Disclosure per Disposal Difference Line item this Circular circular (Rands) Reason for Difference Headline loss (7 452) (8 500) 1048 Inadvertent omission of from continuing a loss on the disposal of operations subsidiary in the amount of R1.05 million from the calculation of headline loss from continuing operations in the Digicore Disposal circular Headline (3 822) (3 791) (31) Inadvertent omission of the loss from tax effects of adjustments to discontinued the reconciliation between operations basic and headline loss from discontinued operations in the amount of R0.03 million from the calculation of headline loss from discontinued operations in the Digicore Disposal circular Headline and (2.48) (2.83) 0.35 Inadvertent omission of diluted headline a loss on the disposal of loss per ordinary subsidiary in the amount share from of R1.05 million from the continuing calculation of headline loss operations from continuing operations (cents) in the Digicore Disposal circular.
Headline and (1.27) (1.26) (0.01) Inadvertent omission of the diluted headline tax effects of adjustments to loss per ordinary the reconciliation between share from basic and headline loss from discontinued discontinued operations operations in the amount of R0.03 (cents) million from the calculation of headline loss from discontinued operations in the Digicore Disposal circular.
The differences above have been assessed to be immaterial by management and as a result, no amendment was required to the Digicore Disposal circular.
31 3. It has been assumed that the Transaction was implemented on 31 May 2015 for purposes of compiling the statement of financial position and on 1 December 2014 for purposes of compiling the statement of comprehensive income. 4. Tax consequences in relation to the Transaction have been taken into account in the statement of comprehensive income. 5. All adjustments, other than Transaction costs described below, will have a continuing effect in the statement of comprehensive income. This is a direct result of the fact that the management fee expense is determined with reference to the net asset value of Stellar Capital in accordance with paragraph 3 of Appendix 2 of this Circular. As a result of this any change in the net asset value will have an impact on the management fee expense. The Transaction 6. The acquisition of 175,365,614 shares in Torre by way of the issue of 390,086,494 Stellar Capital shares at R2.00 per share and payment of approximately R130.2 million in cash, such that Stellar Capital will hold 34.62% of the issued ordinary shares in Torre. The investment in Torre has been accounted for at fair value of approximately R910.39 million (representing an average price of R5.19 per Torre share) in terms of IAS 39 par 14. The fair value of the Torre shares acquired has been determined by using the income approach supplemented by using the market approach as a reasonability check. The income approach fair value represents the value of Torre on a marketable non-controlling basis as at 30 June 2015, after adding the working capital excess and non-operating assets, and deducting non-operating liabilities and interest bearing obligations. The Transaction will be for a marketable, non- controlling stake. In determining the income approach fair value of Torre, a weighted average cost of capital range of between 12.8% and 13.4% was used, giving an indicative valuation range between R4.49 and R5.33 per Torre share. The market approach, which utilises the sustainable earnings of Torre and calculated market multiples of Torre comparables yielded a valuation range of between R4.81 and R5.39 per Torre share. Management is of the opinion that the valuation of R5.20 per Torre share reflects fair value based on the aforementioned considerations. The impact of the Transaction on the statement of financial position will be the recognition of an investment in Torre valued at R910.39 million, the payment of R130.2 million of cash in part settlement of the purchase consideration and the issue of 390,086,494 Stellar Capital shares at R2.00 per share resulting in an increase to share capital of R780.17 million. The impact of the Transaction on the statement of comprehensive income will be the recognition of transaction costs of R1.77 million as noted in paragraph 6 of this Circular and the recognition of management fees in the amount of R4.67 million resulting from the increase in net asset value of R780.17 million as calculated in terms of paragraph 3 of Appendix 2 of this Circular. The gross impact of the aforementioned on the statement of comprehensive income is the recognition of a R6.44 million loss from continuing operations, which loss is fully attributable to equity holders of the parent.
32 ANNEXURE 2
INDEPENDENT REPORTING ACCOUNTANTS’ LIMITED ASSURANCE REPORT ON THE PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS
1 September 2015 The Board of Directors Stellar Capital Partners Limited Office 202, Cape Quarter, The Square 27 Somerset Road Green Point 8001 Dear Sirs INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF THE PRO FORMA FINANCIAL INFORMATION OF CONVERGENET HOLDINGS LIMITED (“STELLAR CAPITAL “ OR “THE COMPANY”) We have completed our assurance engagement to report on the compilation of the pro forma financial information of Stellar Capital Partners Limited by the directors. The pro forma financial information, as set out in paragraph 5 and Annexure 1 of the circular to Stellar Capital shareholders to be issued on or about 1 September 2015 (“the circular”), consists of the pro forma statement of financial position, the pro forma statement of comprehensive income and related notes. The pro forma financial information has been compiled on the basis of the applicable criteria specified in the JSE Limited (“JSE”) Listings Requirements. The pro forma financial information has been compiled by the directors to illustrate the impact of the Transaction (also taking into account the Digicore Disposal and the Cadiz Acquisition) as described in the circular, on the company’s financial position as at 31 May 2015, and the company’s financial performance for the period then ended, as if the transaction had taken place at 31 May 2015 for purposes of the pro forma statement of financial position and at 01 December 2014 for the purposes of the pro forma statement of comprehensive income. As part of this process, information about the company’s financial position and financial performance has been extracted by the directors from the company’s published interim financial information for the 6 months ended 31 May 2015. Responsibilities Directors’ Responsibility for the Pro Forma Financial Information The directors are responsible for compiling the pro forma financial information on the basis of the applicable criteria specified in the JSE Listings Requirements and described in paragraph 11 and Annexure 1 of the circular. Reporting Accountants’ Responsibility Our responsibility is to express an opinion about whether the pro forma financial information has been compiled, in all material respects, by the directors on the basis specified in the JSE Listings Requirements based on our procedures performed. We conducted our engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Circular which is applicable to an engagement of this nature. This standard requires that we comply with ethical requirements and plan and perform our procedures to obtain reasonable assurance about whether the pro forma financial information has been compiled, in all material respects, on the basis specified in the JSE Listings Requirements. For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma financial information.
33 As the purpose of pro forma financial information included in a circular is solely to illustrate the impact of a significant corporate action or event on unadjusted financial information of the entity as if the corporate action or event had occurred or had been undertaken at an earlier date selected for purposes of the illustration, we do not provide any assurance that the actual outcome of the event or transaction would have been as presented. A reasonable assurance engagement to report on whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used in the compilation of the pro forma financial information provides a reasonable basis for presenting the significant effects directly attributable to the corporate action or event, and to obtain sufficient appropriate evidence about whether: - the related pro forma adjustments give appropriate effect to those criteria; and - the pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information. Our procedures selected depend on our judgment, having regard to our understanding of the nature of the company, the corporate action or event in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances. Our engagement also involves evaluating the overall presentation of the pro forma financial information. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria specified by the JSE Listings Requirements and described in paragraph 11 and Annexure 1 of the circular. Consent This report on the pro forma financial information is included solely for the information of the Stellar Capital shareholders. We consent to the inclusion of our report on the pro forma financial information, and the references thereto, in the form and context in which they appear in the circular.
Yours faithfully
Grant Thornton Cape Chartered Accountants (S.A.) Registered Auditors Registration number 2010/016204/21
Per: I. Hashim Chartered Accountant (S.A.) Registered Auditor
Cape Town 31 July 2015
34 ANNEXURE 3
DETAILS OF PREVIOUS VENDORS
1 Vendors of material assets 1.1 The following tables detail the disclosure requirements relating to the vendors of material assets to Stellar Capital and its subsidiaries during the three years preceding the publication of this Circular:
ConvergeNet Transactions 1. Asset Chrystalpine, being the 100% holding company of Andrews Kit Proprietary Limited (trading as Contract Kitting) Full name of vendors Noel Andrews and John Andrews Address 3/5 Monza Close, Kyalami Business Park, (PO Box 6285, Halfway House, 1685) Amount paid and date of On 12 March 2013, shareholders approved the acquisition acquisition of an additional 26% interest in Chrystalpine (an existing subsidiary of the Company), increasing its shareholding in Chrystalpine to 100%, for an acquisition price of R20 million which was settled in cash. There was no liability for accrued taxation, or any apportionment thereof, to the date of this acquisition. Name of promoter or By virtue of the fact that the vendors (Noel Andrews and director with a beneficial John Andrews) were directors on the ChrystalPine and interest in the transaction Contract Kitting board of directors, this acquisition was deemed a related party transaction in terms of the Listings Requirements. Transfer of assets The Contract Kitting Disposal requires the approval of shareholders in order for ConvergeNet’s interest in Contract Kitting to transfer to Tellumat. The existing shareholding of 100% of Contract Kitting by ConvergeNet was transferred to ConvergeNet. Assets ceded or pledged None 2. Asset Sizwe Africa IT Group Proprietary Limited Full name of vendor Yellow Star Group Proprietary Limited Address Sizwe House, 35 Waterloo Avenue, Samrand, Kosmosdal (P.O. Box 5687, The Reeds, 0158)
35 Amount paid and date of On 12 March 2013, shareholders approved the acquisition of acquisition an additional 25% interest in Sizwe (an existing subsidiary of the Company), increasing its shareholding in Sizwe to 100%, for an acquisition price of R45 million which was settled as follows: • R13 million was settled in cash; and • R32 million was settled by the issue and allotment of 100 000 000 shares at an issue price of R0.32 per share. There was no liability for accrued taxation, or any apportionment thereof, to the date of this acquisition. Name of promoter or In terms of the Listings Requirements, the vendor was a director with a beneficial material shareholder of ConvergeNet with 27.6% of the interest in the transaction issued share capital of the Company at the time. In addition, Hanno van Dyk and Tim Modise, executive directors of ConvergeNet at the time, were also directors of Sizwe and Yellow Star as well as shareholders in Yellow Star. Charles Pettit, a non-executive director of ConvergeNet, was also a non-executive director of Yellow Star at the time. Accordingly these directors and their associates were precluded from voting on the resolutions pertaining to this acquisition to the extent that they held shares in ConvergeNet. Transfer of assets The existing shareholding of 100% of Contract Kitting by ConvergeNet was transferred to ConvergeNet. Assets ceded or pledged None of the assets held in Sizwe were ceded or pledged, save for (i) the pledge of the Sizwe Sale Shares and claims and book debts as security for the Sizwe Loan, as detailed in paragraph 3.3.4 of the circular dated 20 September 2013; (ii) the encumberment of land and buildings as security for mortgage bonds; and (iii) the encumberment of motor vehicles and certain IT equipment as security for finance leases. Notes: 1. Stellar Capital no longer holds Chrystalpine nor Sizwe Africa IT Group (Pty) Limited. 2. There were no promoter fees earned in respect of the above transactions. 3. There are no restraints placed on any of the vendors in respect of the above transactions. 4. Warranties on the above transactions were normal for the transactions of that nature. 5. The transactions contained no restraints. 6. No goodwill was paid for the transactions.
36 ANNEXURE 4
CURRICULA VITAE OF THE DIRECTORS OF STELLAR CAPITAL
Dumisani Dumekhaya Tabata (BProc, LLB) Non-executive Chairman Dumisani is an admitted attorney and director and founding partner and director of Smith Tabata Inc. in King William’s Town. In 1996, he was an Acting Judge of the High Court and served in this position for 3 terms. In April 1999 he was appointed by the Premier of the Eastern Cape as one of the Joint Liquidators of the Transkei Agricultural Corporation (TRACOR). After the advent of democracy, Dumisani regularly acted as attorney for Government Departments, local authorities and parastatals. Dumisani has served as Deputy Chairman of Absa Bank’s regional board (Eastern Cape), and was a member of its Advisory Board. He is a member of Absa Bank’s Divisional Board and chairman of Afrifresh, Budget Van and Truck Rentals (Eastern Cape) and Budget Office Furniture. He is also a director of Tabata Buchanan Boyes (STBB), Cape Town and Johannesburg. Peter John van Zyl (BCom) Chief Executive Officer Peter has wide-ranging operational experience in financial management and Financial Director roles and has entrepreneurial experience, with a particular focus on the Information and Communication Technology industry. From 2004 to 2009 he was Commercial Director of Sekunjalo Investments Limited, where he managed a wide range of transactions, including the Sekunjalo Health Care rights issue, the acquisition of a BEE stake in British Telecom and Marine Growers from Transnet, as well as the restructuring of Sekunjalo Financial Services. In 2009, Peter left Sekunjalo to join up with Charles Petit at Stellar Advisers (previously Afrasia Corporate Finance) to focus on the provision of independent advisory services to clients in the SADC region. Stellar Advisers now provides a range of advisory, structuring and lending solutions to corporate and financial institutions clients across SADC from its offices in Johannesburg, Cape Town and Mauritius. Peter also established the AfrAsia Special Opportunities Fund and acted as the fund manager until 30 June 2013. Peter remains a member of the credit committee on the fund. In 2012/2013, Peter established the Thunder Investment Group which focuses on international private equity investments in ICT, financial services and property. Peter also holds a number of other non-executive positions and is currently the Chairman of Torreand the CEO of Stellar Capital. Charl Benjamin de Villiers (BAcc/LLB)(CA) Chief Financial Officer Charl is a qualified Chartered Accountant (SA). He holds B.Acc LLB (cum laude) and B.Acc (Hons) degrees from the University of Stellenbosch. He completed his SAICA training with Deloitte in its financial services division and was later retained as an audit manager in the same division where he serviced a portfolio of asset managers and one of South Africa’s most prominent reinsurers. In May 2013, Charl joined Stellar Advisers (previously AfrAsia Corporate Finance) where he advised ConvergeNet Holdings Limited on the sale of Sizwe Africa IT Group and other operating subsidiaries as well as the subsequent conversion of the Company to an investment entity. Charles Edward Pettit (BCom (Hons), CFA) Non-executive Director Charles graduated from the University of Cape Town with a First Class Honours degree in Finance and subsequently qualified as a CFA charter holder while working in London for Close Brothers Corporate Finance. At Close Brothers Charles worked on a wide range of M&A and Restructuring transactions and following his return to South Africa in 2008 he established Stellar Advisers (previously AfrAsia Corporate Finance) to focus on the provision of independent advisory services to clients in the SADC region. Stellar Advisers now provides a range of advisory, structuring and lending solutions to corporate and institutional clients across SADC from its offices in Johannesburg, Cape Town and Mauritius. Charles advised on the balance sheet restructuring of formerly-known SA French Limited from 2010 and led the 2011 rights issue for that company as well as its delisting and sale to Torre in November 2013. He was appointed as the Chief Executive Officer of Torre in August 2012 and now serves in this position on a permanent basis.
37 Lerato Mangope (BA Economics) Independent Non-executive Director Lerato holds a Bachelor of Arts in Economics degree from Vista University and is in the final stages of completing her MBA. In addition, she has a PDM from the University of Natal as well as a Diploma in Investments Liability Management from the University of Johannesburg (formerly RAU). She is currently the head of the Asset and Liability Management and Corporate Funding (ALMU) division of the Industrial Development Corporation of South Africa Limited (“IDC”). In her present position, she deals with the planning and implementation of the borrowing plan for the IDC on an annual basis, manages the cost of debt as well as the tender procurement process relating to the funding of the IDC and covenants. Previously, Lerato was a Senior Risk Manager with the IDC for eighteen months where she proactively promoted risk awareness whilst monitoring and overseeing the management of key risks facing the IDC on the basis of Enterprise-Wide Risk Management. She also worked as a Risk Manager for Transnet for seven years where she dealt with the analysis of the Transnet portfolio, the management and reporting of liquidity reports to the Strategic Committee, as well as reviewing the Transnet financial instrument policies. Janine de Bruyn (BCom (Hons), BCompt) Independent Non-executive Director Janine completed a BCom (Hons) degree in financial analysis and portfolio management at the University of Cape Town and obtained a BCompt degree through UNISA, while completing her articles at PriceWaterhouseCoopers. Janine has consulted to various black empowerment groups and financial services companies over the last ten years, specialising in the analysis of private equity opportunities, valuations, corporate finance advice, corporate actions, socially responsible focused private equity as well as financial management. Janine gained invaluable experience in empowerment, development finance and private equity at Sanlam Investment Management and Futuregrowth Asset Management and has held a number of directorships. She is a member of the Institute of Directors of Southern Africa. Caroline Clare Wiese (LLB, BA (Journalism)) Independent Non-executive Director Clare holds an LLB degree from the University of Cape Town and a BA degree in Journalism from the University of Westminster. After having worked as a magazine journalist at House & Leisure (Associated Magazines), she completed her postgraduate law degree after which she worked at Bowman Gilfillan as a litigation attorney for three years, before founding Sloane & Madison, a company which specialises in the manufacturing of Fine Jewellery. Christina Helmien Wiese (BA(Value & Policy Studies), Masters (Management)) Independent Non-executive Director Christina graduated from the University of Stellenbosch with a BA degree in Value and Policy Studies, after which she did volunteer work at the Red Cross War Memorial Children’s Hospital in Cape Town. She also attended a global leadership program at the Iacocca Institute at Lehigh University in the USA. She subsequently completed her Masters degree in Management at the London School of Economics during which time she also completed an internship program at Credit Suisse in London. She has worked in the micro-finance industry and currently consults for an online retailer in South Africa.
38 ANNEXURE 5
PREVIOUS ISSUES OF STELLAR CAPITAL SHARES
Details of shares issued by Stellar Capital in the three years preceding the Last Practicable Date are set out below:- No. of shares issued Par value Date Issue Price Authorised Share Capital 100 000 000* No par value *post the consolidation of shares as detailed in paragraph 17.3 of the Circular Issued share capital 31 August 2012 887 878 185 0.1 cent Shares repurchased in terms of disposal of interest in Future Cell, as detailed in circular dated 17 October 2012 (71 478 594) 0.1 cent 26/11/2012 29.65 cents Treasury shares sold by subsidiary 4 000 000 0.1 cent 18/12/2012 20 cents Shares vested in terms of the forfeitable share plan 3 000 000 0.1 cent 01/03/2013 34 cents Treasury shares sold by subsidiary 27 777 778 No par value 14/03/2013 18 cents Shares and treasury shares issued in terms of acquisition of Sizwe 100 000 000 No par value 01/05/2013 32 cents Treasury shares sold by subsidiary 9 600 000 No par value 04/07/2013 13 cents 31 August 2013 960 777 369 No par value Shares vested in terms of forfeitable shares plan 4 420 000 No par value 01/09/2013 10 cents General issue of shares for cash 38 529 895 No par value 04/11/2013 8.87 cents Odd-lot and specific offer (34 447) No par value 06/12/2013 12 cents Share consolidation (903 323 536) No par value 23/12/2013 31 August 2014 100 369 281 No par value 31 January 2015 100 946 502 No par value Shares issued in terms of a private placement 75 000 000 No par value 23/01/2015 R2.00 Shares issued in lieu of ManCo Fees 2 525 000 No par value 23/01/2015 R2.00 Shares issued in terms of the acquisition of Digicore 59 615 963 No par value 30/01/2015 R2.00 Shares issued in terms of the acquisition of MRI 12 636 332 No par value 30/01/2015 R2.00 Shares issued in terms of the acquisition of GGM 21 220 820 No par value 30/01/2015 R2.00 Shares issued in terms of the acquisition of GGM 10 841 311 No par value 12/02/2015 R2.00 Total Issued Share Capital 282 785 928
39 ANNEXURE 6
SHARE PRICE HISTORY OF STELLAR CAPITAL
The share price history of the Company’s shares traded on the JSE for the past three years up until the Last Practicable Date are given below: The table details the highest, lowest and closing prices and aggregate volumes traded in Stellar Capital shares for: • each day over the 30 days preceding the Last Practicable Date; and • each month over the 12 months prior to the date of issue of this Circular
High Low Close Volume Value Date (cents) (cents) (cents) Traded Traded (R)
Daily 25 June 2015 215 209 215 133 806 281 299 26 June 2015 216 211 211 282 456 607 380 29 June 2015 209 203 203 93 120 192 282 30 June 2015 209 205 207 142 153 294 346 1 July 2015 210 206 208 240 053 500 250 2 July 2015 210 203 205 129 592 267 178 3 July 2015 207 180 203 281 218 543 005 6 July 2015 208 195 200 85 952 170 924 7 July 2015 210 200 200 3 691 987 7 496 310 8 July 2015 215 202 215 10 843 472 21 743 904 9 July 2015 275 219 260 937 189 23 931 119 10 July 2015 268 246 250 741 729 1 894 040 13 July 2015 269 245 245 322 143 819 767 14 July 2015 259 249 249 308 948 776 298 15 July 2015 250 230 235 1 461 063 3 024 836 16 July 2015 245 232 240 194 677 464 006 17 July 2015 249 240 245 206 393 503 678 20 July 2015 260 245 254 1 174 581 2 982 308 21 July 2015 276 260 275 1 042 858 2 808 740 22 July 2015 278 272 272 744 902 2 048 012 23 July 2015 276 272 272 611 663 1 676 971 24 July 2015 275 269 270 373 900 1 018 528 27 July 2015 273 260 260 453 738 1 214 044 28 July 2015 272 265 268 702 150 1 893 519 29 July 2015 272 261 269 534 016 1 427 928 30 July 2015 270 264 267 240 451 639 258 31 July 2015 270 261 267 318 754 852 308 3 August 2015 270 268 270 151 037 407 085 4 August 2015 270 268 270 1 210 083 3 265 333 5 August 2015 275 267 272 2 051 727 5 544 626 6 August 2015 290 280 289 186 487 535 265 7 August 2015 335 290 317 791 105 2 497 869 11 August 397 320 341 1 439 475 5 062 367 12 August 345 320 330 1 917 930 6 369 774 13 August 335 328 330 522 717 1 727 166 14 August 330 316 325 440 171 1 430 111 17 August 330 320 325 263 904 859 816 18 August 330 321 329 303 339 992 738 19 August 330 320 325 248 793 810 430 20 August 323 299 307 488 917 1 501 999 21 August 310 286 310 811 879 2 380 933
40 High Low Close Volume Value Date (cents) (cents) (cents) Traded Traded (R)
July 2014 119 83 119 670 646 635 109 August 2014 165 119 165 6 746 950 8 305 733 September 2014 275 146 237 19 180 500 38 893 679 October 2014 250 201 235 8 118 978 16 850 683 November 2014 245 207 240 1 494 512 3 420 493 December 2014 250 206 221 9 988 800 20 277 914 January 2015 226 171 198 1 819 301 3 688 064 February 2015 224 186 215 7 593 990 15 674 045 March 2015 218 186 197 7 300 031 14 710 770 April 2015 206 169 184 3 907 781 7 275 825 May 2015 204 165 200 10 105 901 18 878 913 June 2015 218 190 207 5 572 360 11 543 291 July 2015 278 180 267 25 641 429 57 158 932
Source: JSE
41 ANNEXURE 7
MATERIAL CONTRACTS AND TRANSACTIONS OF TORRE
Torre and its subsidiaries have entered into the following material contracts and transactions, which are outside of the ordinary course of business, during the two years preceding this Circular: 1. Acquisition of Power Parts Torre entered into an agreement to acquire 51% of the issued shares in and claims against Power Parts (Pty) Ltd (“Power Parts”) which acquisition became effective on or about 1 March 2014. Subsequently, Torre acquired an additional 29% of Power Parts from a director who exited the business. 2. Internal restructure The Torre Group underwent an internal restructure whereby it established a South African based holding company for the businesses within the Group that operate out of South Africa and the common monetary area, namely Torre Holdings (Pty) Ltd (which is wholly-owned by Torre South Africa Holdings (Pty) Ltd), as well as a Mauritian based holding company for the businesses that operate outside of South Africa and the common monetary area, namely Torre International Ltd. 3. Acquisition of the Kanu Group In February 2014 Torre agreed to acquire 85% of the issued ordinary share capital of Kanu Equipment Limited, Kanu SA, Kanu Ltd and Kanu Congo (a wholly owned subsidiary of Kanu SA) (“Kanu Group”) from a consortium of shareholders (the “Kanu Acquisition”) for a maximum total consideration of EUR 5,500,000. The Kanu Acquisition was categorised as a category 2 transaction in terms of the Listings Requirements. 4. Control Instruments Restructure Prior to Torre acquiring the Control Instruments Group (“CI Group”), the CI Group implemented a process of repositioning and restructuring to focus primarily on the automotive aftermarket and to service the South African and the Sub-Saharan markets. In the course of restructuring its operations, it disposed of (i) 100% of Pi Shurlok (Pty) Ltd (“Pi Shurlok”) to PFK Electronics (Pty) Ltd (“PFK”) with effect from 07 November 2011 (ii) its PI Shurlok offshore operations, comprising Pi Shurlok Limited in the UK and Pi Shurlok LLC in the USA, (iii) the Ariston and Specialised Plastics Engineering divisions of Pi Shurlok to Smiths Plastics (Pty) Ltd and (iv) its fleet management businesses to TeliMatrix Limited. CI Automotive and Control Instruments Corporate Services (Pty) Ltd (“CICS”) entered into an agreement of sale of business, wherein Control Instruments Automotive purchased the management and administration services business of CICS as a going concern with effect from 15 May 2012. 5. Acquisition of the Control Instruments Group With effect from 12 December 2013, Torre acquired 34.26% of the Control Instruments Group for a purchase consideration of R65 259 520. With effect from May 2014, Torre acquired the remaining shares in the Control Instruments Group to own 100% of the company for a purchase consideration of R128 465 771. This acquisition was done by way of a scheme of arrangement (the vendors were all the Control Instruments shareholders other than Torre) and the purchase consideration was settled in cash. The details of the acquisition were contained in a circular to Torre shareholders dated 6 March 2014. Per a purchase price allocation assessment, the goodwill paid for the acquisition totalled R73 000 000. 6. Private placement – June 2014 Torre entered into subscription agreements with selected investors to issue 136 363 636 new Torre shares at an issue price of R2.20 per share raising R300 000 000. The additional capital, combined with new debt facilities that were raised by the Group, was used to fund organic expansion plans, the Control Instruments acquisition and the acquisitions of Kanu and Power Parts. 7. Acquisition of Manhand With effect from 1 April 2014, Torre acquired 100% of Manhand SA (Pty) Ltd for a maximum consideration of R25 920 000 settled through a combination of cash and Torre shares. The acquisition was a category 2 transaction in terms of the Listing Requirements.
42 8. Adoption of a share appreciation and bonus shares plan On 30 September 2014, Torre shareholders approved the adoption of a share appreciation rights and bonus share plan, the terms of which were detailed in a circular to Torre shareholders dated 1 September 2014. 9. Acquisition of Minosucra With effect from 1 October 2014, Torre acquired 100% of Minosucra SARL which acquisition fell below the categorization thresholds of the Listing Requirements. 10. Transfer from the Alternative Exchange to the Main Board On 15 October 2014 Torre transferred from the Alternative Exchange of the JSE lists on to the Main Board. Torre is listed under the “Industrial Goods and Services – Industrial Suppliers” sector of the Main Board. 11. Acquisition of Elephant Lifting With effect from 1 January 2015, Torre acquired 100% of Elephant Lifting for a purchase consideration of R180 000 000 settled through a combination of upfront and deferred payments in both cash and shares. This acquisition was a category 2 transaction in terms of the Listing Requirements. Per a purchase price allocation assessment, the goodwill paid for the acquisition totalled R113 000 000. 12. Acquisition of Set Point Group With effect from 4 May 2015, Torre acquired 100% of Set Point Group through a scheme of arrangement for a purchase consideration of R370 000 000 with a maximum upward adjustment to the price up to a total of R444 000 000 dependent on both Torre and Set Point achieving certain financial targets as set out in a detailed circular to Torre shareholders dated 1 April 2015 and in the combined scheme circular to Set Point shareholders dated 1 April 2015. Per a purchase price allocation assessment, the goodwill paid for the acquisition totalled R139 000 000. 13. Private Placement On 30 April 2015, Torre shareholders approved the issuing of 82 013 329 new Torre shares at R4.25 per share to Safika Holdings (Pty) Ltd and Mineworkers Investment Company (Pty) Ltd raising a total of R348 556 650. Details of the private placement were set out in a circular to Torre shareholders dated 1 April 2015. In addition, to Stellar Capital’s best knowledge, save for the contracts contained in this Annexure: • Torre has not entered into any contracts which contain an obligation for settlement that is material to the Torre Group at the date of the Circular; • Torre is not subject to any third party management contracts; • The assets in respect of the above-mentioned acquisitions have all been transferred to Torre. The assets in respect of the Transaction will be transferred on fulfilment of the conditions precedent as set out in the Circular; • No restraint payments or technical fees are payable by the Torre Group; and • Torre has not entered into any promoters’ agreements during the three years preceding the date of the Circular.
43 Stellar Capital Partners Limited (Previously ConvergeNet Holdings Limited) (Incorporated in the Republic of South Africa) (Registration number 1998/015580/06) (“Stellar Capital” or the “Company”) Share code: SCP ISIN: ZAE000198586
REVISED LISTING PARTICULARS
The definitions and interpretations commencing on page 4 of the Circular apply mutatis mutandis to this cover page. In addition, the corporate information on the inside cover of the Circular also applies to these Revised Listing Particulars. These Revised Listing Particulars are not an invitation to the public to subscribe for the Company’s shares but is issued, in compliance with the Listings Requirements, for the purpose of providing information to the public with regard to the Company. These Revised Listing Particulars have been prepared on the assumption that the special and ordinary resolutions proposed in the notice of General Meeting forming part of the Circular to which these Revised Listing Particulars are attached will be passed at the General Meeting of shareholders to be held at Level P3, Oxford Corner, cnr Jellicoe and Oxford Roads, Rosebank, Johannesburg at 10:00 on Wednesday, 21 October 2015, and registered as applicable. Prior to the Transaction, the stated capital of Stellar Capital is R519 480 000, comprising of 282 785 928 ordinary shares of no par value. Following the Transaction, Cadiz Acquisition and Digicore Disposal, the authorised share capital of Stellar Capital is 1 000 000 000 ordinary shares of no par value and, the issued stated capital of Stellar Capital will be R1 485 642 comprising 751 516 411 (excluding treasury shares) ordinary no par value shares. The ordinary certificated or dematerialised shares issued in terms of the Transaction will rank pari passu with all other ordinary shares issued by Stellar Capital. The aforementioned share issue, which is not an offer to the public, will be effected at an issue price of R2.00 per share. There are 40 000 treasury shares in issue at the Last Practicable Date. The Stellar Capital directors, whose names are given on the inside cover of the Circular, accept collectively and individually full responsibility for the accuracy of the information given in these Revised Listing Particulars and certify that, to the best of their knowledge and belief, no facts have been omitted which would make any statement false or misleading, and that they have made all reasonable enquiries to ascertain such facts and that these Revised Listing Particulars contain all information required by the Listings Requirements.
Corporate Finance Adviser Independent Reporting Independent Sponsor and Transaction Sponsor Accountants and Auditors to Stellar Capital
These Revised Listing Particulars are only available in English. A copy hereof may be obtained from the registered offices of Stellar Capital, the address of which appears in the section “Corporate Information and Advisers” on the inside front cover of the Circular, from Wednesday, Friday, 4 September 2015 until Friday, 16 October 2015. These Revised Listing Particulars are also available on the Company’s website (www. stellarcapitalpartners.co.za).
44 TABLE OF CONTENTS
The definitions and interpretations commencing on page 4 of the attached Circular shall apply, mutatis mutandis, to this section. Page Corporate information and advisers Inside front cover Revised Listing Particulars 1. Incorporation, history and prospects 46 2. Directors and senior management 47 3. Assets, liabilities and other financial information 48 4. Share capital 48 5. Major beneficial shareholders 49 6. Government protection and investment encouragement law 49 7. Royalties 49 8. Dividends 49 9. Code of corporate practice and conduct 49 10. Listing on other stock exchanges 49 11. Promoter and commissions 50 12. Interests of directors and promoters 50 13. Litigation statement 50 14. Material changes, contracts and transactions 50 15. Working capital statement 51 16. Expenses relating to the Transactions 51 17. Directors’ responsibility statement 51 18. Consents 51 19. Documents available for inspection 51 Appendix 1 Material contracts and transactions 52 Appendix 2 Extract from the Management Contract 57 Appendix 3 Loans receivable 60 Appendix 4 Extracts from Memorandum of Incorporation 64 Appendix 5 History of Control 71 Appendix 6 Corporate Governance 72 Appendix 7 Other directorships held by Stellar Capital directors 87
45 1 INCORPORATION, HISTORY AND PROSPECTS 1.1 Stellar Capital (previously ConvergeNet Holdings Limited) was established in 2005 to address the growing need for convergence solutions in the ICT industry. The Company identified the need for these solutions in emerging markets, specifically relating to multi-disciplinary products, solutions and services. In February 2007, the Company reverse listed into a cash shell, Vestor Investments Limited, which was listed on the JSE. Several strategic acquisitions were concluded which were reversed into the enlarged listed company. Details of these strategic acquisitions were included in a circular to shareholders dated 3 August 2007. The name of the Company was changed to ConvergeNet Holdings Limited to reflect the Company’s focus on ICT infrastructure and the industry’s driving force towards convergence. 1.2 Details regarding the vendors of material assets to Stellar Capital during the three years preceding the publication of these Revised Listing Particulars are included in Appendix 1. 1.3 On 8 September 2014 Stellar Capital announced that it had identified an opportunity to create an investment company which:- 1.3.1 leveraged the Main Board listing of Stellar Capital; 1.3.2 optimised the use of the Company’s existing assets; 1.3.3 harnessed the deal-making experience of the Board and the Company’s corporate advisers in a cost-effective manner; 1.3.4 facilitated the introduction of strong new shareholders; and 1.3.5 established a platform to facilitate further capital raising and the growth of the initial investment portfolio. 1.4 To this end, the JSE approved Stellar Capital’s application for the transfer of the Company’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE with effect from 29 June 2015. The Company appointed Stellar Advisers as the dedicated investment manager to manage the portfolio of the Company in accordance with Section 15 of the Listings Requirements. The Company isadvised by Stellar Advisers (previously AfrAsia Corporate Finance) to ensure that the Company is adequately advised on the implementation of its strategy. 1.5 Investment strategy 1.5.1 The investment strategy of the Company, as included in the Company’s investment charter and which was formally approved by the Board on 3 December 2014, entails the following:- 1.5.1.1 to grow a portfolio of equity, debt and hybrid securities, unconstrained by any particular market or sector, in listed and unlisted businesses, that will generate above average returns on capital for the Company’s shareholders; 1.5.1.2 to apply a hands-on investment approach, in order to assist management teams and to provide strategic input, without assuming direct operational responsibility; 1.5.1.3 to apply a flexible investment approach relating to the timing and duration of investments; 1.5.1.4 to actively engage with investee companies in relation to their corporate activity and other strategic initiatives; and 1.5.1.5 to leverage the existing network of ManCo to create a unique, well-diversified investment vehicle which will be an attractive proposition for institutional investors. 1.6 Stellar Capital’s stated strategy is to grow a portfolio of equity, debt and hybrid securities that will generate above average returns on capital for the Company’s shareholders. In furtherance of this strategy, Stellar Capital intends to undertake acquisitions as and when opportunities that meet Stellar Capital’s investment criteria are identified. Stellar Capital’s long-term objectives with regard to its investment in Torre, like other investments, will be dependent on the performance of the investment. 1.7 The implementation of the investment strategy referred in paragraph 1.5.1 above will be monitored by the Board, and any amendments thereto shall require approval by shareholders in general meeting.
46 1.8 In light of the transfer of the Company’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub-sector of the JSE, and in order to correctly describe the Group’s restructured nature, the change of the Company’s name to “Stellar Capital Partners Limited” was approved by shareholders at the General Meeting. 1.9 Prospects 1.9.1 The prospects for the Group are positive and the Board is optimistic about the future. Following the completion of the Transaction, the Stellar Capital Group will have a scalable balance sheet that will allow it to both secure additional capital and invest further into its investees as required. 1.9.2 The Board has considered all the information available to it in relation to Torre, and believe that it has significant growth potential. Accordingly, the Board is confident that significant value will be created for shareholders. 2 DIRECTORS AND SENIOR MANAGEMENT 2.1 Directors of Stellar Capital 2.1.1 The name, age, qualification, nationality, occupation and business address of each of the directors of Stellar Capital, as well as their interest in Company shares, have been included on page 19 of the attached Circular. Brief curricula vita of each of the Stellar Capital are included in Annexure 4 to the attached Circular. 2.1.2 Details of the other directorships held by the directors of Stellar Capital during the previous five years are included in Appendix 7. 2.2 Directors’ remuneration Details of the remuneration of the Stellar Capital directors have been included in paragraph 15 of the Circular. The Transaction will not affect the directors’ capacity or remuneration. 2.3 Further particulars regarding directors 2.3.1 None of the directors of Stellar Capital: 2.3.1.1 have been declared bankrupt, insolvent or have entered into any individual voluntary compromise arrangements; 2.3.1.2 have been directors with an executive function of any company put under, or proposed to be put under, any business rescue plans and/or where a resolution has been proposed by any entity to commence business rescue proceedings, or that is or was the subject of an application for any entity to begin business rescue proceedings, any notices in terms of section 129(7) of the Companies Act having been delivered, receiverships, compulsory liquidations, creditors voluntary liquidations, administrations, company voluntary arrangements or any compromise or arrangements with creditors generally or any class of creditors of any company, at the time of such event or within the 12 months preceding any such event; 2.3.1.3 have been partners in a partnership that was the subject of any compulsory liquidations, administrations or partnership voluntary arrangements of any partnership, at the time of such event or within the 12 months preceding any such event; 2.3.1.4 entered into any receiverships of any asset(s) or of a partnership where such director is or was a partner during the preceding 12 months; 2.3.1.5 have been publicly criticised by a statutory or regulatory authority, including recognised professional bodies, or been disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company; 2.3.1.6 been involved in any offence of dishonesty; 2.3.1.7 been removed from an office of trust, on the grounds of misconduct, involving dishonesty; or 2.3.1.8 been the subject of any court order declaring him delinquent or placing him under probation in terms of section 162 of the Companies Act and/or section 47 of the Close Corporations Act, 1984 or been disqualified by a court to act as a director in terms of section 69 of the Companies Act.
47 3 ASSETS, LIABILITIES AND OTHER FINANCIAL INFORMATION 3.1 Historical financial information In accordance with section 11.61 and 11.62 of the Listings Requirements, the 3 year historical information of Stellar Capital is incorporated into these Revised Listing Particulars by reference and are available on the websites as detailed in paragraph 8 of the Circular and are also available for inspection at the registered office of the Stellar Capital and its sponsor by shareholders and/ or prospective investors at no charge, during normal office hours from Friday, 4 September 2015 until Friday, 16 October 2015. 3.2 Pro forma financial information Details of the pro forma financial information for the Company in relation to the Transaction is set out in paragraph 5 of and Annexure 1 to the attached Circular. 3.3 Material borrowings The Stellar Capital Group does not have any material borrowings. There is no loan capital outstanding. 3.4 Material commitments, lease payments and contingent liabilities The Stellar Capital Group has no material commitments or contingent liabilities. 3.5 Loans receivable Details of loans receivable as at the Last Practicable Date are set out in Appendix 3 to these Revised Listings Particulars. 3.6 Subsidiary companies and inter-company loans Stellar Capital does not have any material inter-company financial or other transactions or any intercompany balances before elimination on consolidation. 3.7 Property acquired or disposed of Save for as disclosed in Appendix 1 to these Revised Listing Particulars, there have been no material acquisitions or disposals of businesses, companies and properties or proposed acquisitions or disposals of businesses, companies and properties by the Company during the three years preceding the date of issue of these Revised Listing Particulars. 3.8 Share Price History The share price history of Stellar Capital’s shares traded on the JSE is summarised in Annexure 6 to the attached Circular. 3.9 Principal Leasehold Properties As at the Last Practicable Date the Stellar Capital Group has no leasehold properties. 4 SHARE CAPITAL 4.1 Share capital Details of the share capital of Stellar Capital post the implementation of the Transaction has been included in paragraph 17 of the attached Circular (having also taken the effects of the Cadiz Acquisition and Digicore Disposal into account). 4.2 Conversion rights, voting rights, rights to distributions and variation of rights 4.2.1 Details of conversion rights, voting rights, rights to distributions and variation of rights are set out in paragraph 17.2 of the attached Circular. 4.2.2 Extracts from the Memorandum of Incorporation relating to the voting rights attached to the shares are set out in Appendix 4 to these Revised Listing Particulars. 4.3 Subdivision or consolidation of Stellar Capital shares Save for the Share Consolidation, as approved by shareholders in general meeting on 22 October 2013, no consolidations or sub-divisions have occurred in respect of Stellar Capital shares.
48 4.4 Options or preferential rights in respect of Stellar Capital shares There is no contract or arrangement, either actual or proposed, whereby any option or preferential right of any kind has been or will be given to any person to subscribe for any securities of Stellar Capital. 4.5 Issues and repurchases of shares Details of the repurchase of shares by Stellar Capital in the three years preceding the Last Practicable Date are set out in Annexure 5 to the attached Circular. 5 MAJOR BENEFICIAL SHAREHOLDERS 5.1 Insofar as is known to Stellar Capital, the major shareholders who will beneficially hold 5% or more (directly or indirectly) of the issued Stellar Capital shares pursuant to the Transaction (and taking into account the Cadiz Acquisition and the Digicore Disposal) is as follows:
% of issued share Number of capital of Stellar Shareholder shares held Capital Asgard Capital Assets Limited 141 151 848 18.78% SJP Capital Limited 107 900 000 14.36% ManCo 75 155 641 10.00% Investec Asset Management 65 781 035 8.75% Titan Nominees Proprietary Limited 39 258 132 5.22% TOTAL 429 246 656 57.11% 5.2 The information included in this paragraph 5 is based on the share register of the Company as per Strate and Computershare as at 17 July 2015, due to the share register closing on the last Friday of each month in line with Strate’s policies. 5.3 Insofar as it is known to the directors of Stellar Capital, there is no controlling shareholder of Stellar Capital as defined in the Listings Requirements, nor has there been a change in control of Stellar Capital since its incorporation up to the Last Practicable Date, save for as detailed in Appendix 5 hereto. 6 GOVERNMENT PROTECTION AND INVESTMENT ENCOURAGEMENT LAW There is no government protection or investment encouragement law in respect of the operations of the Company. 7 ROYALTIES There are no royalties or items of a similar nature payable to or receivable by Stellar Capital. 8 DIVIDENDS A future dividend policy for Stellar Capital, as an investment entity, will be set by the Board from time to time. However, it is not anticipated that dividends to ordinary shareholders will commence in the short term. 9 CODE OF CORPORATE PRACTICE AND CONDUCT The Board endorses and has adopted and applied the Code of Corporate Practices and Conduct as set out in the King III Report. In supporting the Code, the directors of Stellar Capital are committed to conducting the business affairs of Stellar Capital with the utmost good faith, highest level of ethics and in accordance with generally acceptable practices within the constraints of industry norms, thus ensuring timely, relevant and meaningful reporting to Stellar Capital shareholders and other stakeholders. Further details regarding Corporate Governance are set out in Appendix 6 of the attached Circular. 10 LISTING ON OTHER STOCK EXCHANGES As at the date of these Revised Listing Particulars, no securities of Stellar Capital are listed on any other stock exchange. All of Stellar Capital’s issued ordinary shares are listed on the JSE under the abbreviated name “Stellar “, share code “SCP” and ISIN ZAE000198586.
49 11 PROMOTER AND COMMISSIONS 11.1 No amounts have been paid, or are accrued as payable, or is proposed to be paid by the Stellar Capital Group to any promoter, partnership or syndicate, other than in the normal course of business, during the three years preceding the date of these Revised Listing Particulars. 11.2 No amounts in relation to commissions have been paid or are payable in respect of underwriting during the three years preceding the date of these Revised Listing Particulars. 11.3 No amounts have been paid, or have been agreed to be paid, within the three years preceding the date of these Revised Listing Particulars, to any director or to any company in which he is beneficially interested, directly or indirectly, or of which he is a director (“the associate company”) or to any partnership, syndicate or other association of which he is a member (“the associate entity”), in cash, securities or otherwise, by any person, either to induce him to become, or to qualify him as a director or otherwise for services rendered by him or by the associate company or the associate entity in connection with the promotion or formation of the Company. 12 INTERESTS OF DIRECTORS AND PROMOTERS 12.1 Insofar as it is known to the directors of Stellar Capital, no director or promoter, or any of their associates, has any or has had any material beneficial interest, direct or indirect, in the promotion of the Stellar Capital Group or in any property to be acquired or proposed to be acquired by the Stellar Capital Group during the three years preceding the date of these Revised Listing Particulars. None of the directors or any of their associates has any interest in the Transaction. 12.2 The direct and indirect beneficial interests of the directors and their associates in Stellar Capital’s issued share capital, as at the Last Practicable Date and pursuant to the implementation of the Transaction, are detailed in paragraph 13 of the attached Circular. 13 LITIGATION STATEMENT 13.1 In terms of section 7.D.11 of the Listings Requirements, the directors, whose names appear under “Corporate Information and Advisers” on the inside cover of the attached Circular, are not aware of any legal or arbitration proceedings, including any proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the Stellar Capital Group or any of its subsidiaries’ financial position. 14 MATERIAL CHANGES, CONTRACTS AND TRANSACTIONS 14.1 On 15 December 2014 the JSE approved Stellar Capital’s application for the transfer of the Company’s listing from the “Computer Services” sub-sector to the “Investment Companies” sub- sector of the JSE with effect from 29 June 2015. 14.2 As detailed in announcements dated 8 September 2014 and 9 September 2014, the Board had resolved to amend the financial year-end of the Company from 31 August 2014 to 30 November 2014. 14.3 Save for the material contracts and transactions detailed in Appendix 1 to these Revised Listing Particulars there have been no other known material changes in the financial or trading position of Stellar Capital and its subsidiaries since the end of the last financial year ended 30 November 2014 up to and including the Last Practicable Date and no other known material contracts and transactions entered into over the past two years preceding this Circular. 14.4 Details of material contracts entered into by the Stellar Capital are contained in Appendix 1 to these Revised Listing Particulars. Save for these contracts, there have been no material contracts or transactions entered into by the Stellar Capital Group during two years preceding these Revised Listing Particulars, other than in the ordinary course of business until the Last Practicable Date. In addition, the Stellar Capital confirms that, save for the contracts contained in Appendix 1 to these Revised Listing Particulars: 14.4.1 it has not entered into any contracts which contain an obligation for settlement that is material to the Stellar Capital at the date of these Revised Listing Particulars; 14.4.2 no restraint payments or technical fees are payable by Stellar Capital; 14.4.3 it has not entered into any promoters’ agreements during the three years preceding the date of these Revised Listing Particulars;
50 14.4.4 there are no service contracts in place in respect of the executive director and non- executive directors of the Company; and 14.4.5 other than as mentioned in 14.3 above, no known material changes in the financial or trading position of Stellar Capital have taken place during the past five years preceding these Revised Listing Particulars until the Last Practicable Date. 14.5 On 8 December 2014 Stellar Capital concluded the Management Agreement in terms of which ManCo manages the portfolio of the Company in accordance with section 15 of the Listings Requirements, details of which are set out in Appendix 2 of these Revised Listing Particulars. 15 WORKING CAPITAL STATEMENT The directors of Stellar Capital have considered the impact of the Transaction and provided their opinion on the working capital of the Stellar Capital Group in paragraph 9 of the attached Circular. The working capital statement was prepared on the Stellar Capital Group, as enlarged by the Transaction and taking into account the Cadiz Acquisition and Digicore Disposal. 16 EXPENSES RELATING TO THE TRANSACTIONS Details of the expenses relating to the Transaction are contained in paragraph 6 of the attached Circular. 17 DIRECTORS’ RESPONSIBILITY STATEMENT The directors, whose names are set out on inside cover of the attached Circular, collectively and individually accept full responsibility for the accuracy of the information given in this Revised Listing Particulars in relation to Stellar Capital and certify that, to the best of their knowledge and belief, no facts have been omitted which would make any statement in this Revised Listing Particulars false or misleading, that all reasonable enquiries to ascertain such facts have been made and that the Revised Listing Particulars contains all information required by law and the Listings Requirements. 18 CONSENTS Details of the consent provided by advisers relating to the Transaction are contained in paragraph 22 of the attached Circular. 19 DOCUMENTS AVAILABLE FOR INSPECTION AND FINANCIAL INFORMATION INCORPORATED BY REFERENCE Details regarding the documents which are available for inspection and financial information incorporated by reference are contained in paragraph 8 and 26 of the attached Circular. SIGNED at ROSEBANK on behalf of the Board on 2 SEPTEMBER 2015 in terms of powers of attorney granted by the directors.
By order of the Board
STELLAR CAPITAL PARTNERS LIMITED PJ van Zyl Chief Executive Officer 4 September 2015
51 APPENDIX 1
MATERIAL CONTRACTS AND TRANSACTIONS
For the purpose of these Revised Listing Particulars and for this Appendix 1, the following words and expressions bear the meanings assigned to them below and outline details of transactions entered into in the past two years: “Additional Digicore means the agreement dated 23 October 2014 concluded between Stellar Acquisition Sale and Capital, Pannar Group and ClucasGray in terms of which Stellar Capital Purchase Agreement” acquired 0.10% of Digicore for R625 000 from Pannar Group and 1.52% of Digicore for R9 375 000 from ClucasGray, which acquisitions form part of the Digicore Acquisition; “Additional Goliath Gold means the agreement dated 23 October 2014 concluded between Stellar Acquisition Sale and Capital, certain clients of Trinity Asset Management (whom were all public Purchase Agreement” shareholders and not related parties of Stellar Capital as defined in the Listings Requirements) and Mr W Geyer (a public shareholder who was not a related party of Stellar Capital as defined in the Listings Requirements), in terms of which Stellar Capital acquired an additional 5.35% of Goliath Gold for R15 779 900 from certain clients of Trinity Asset Management and 0.12% of Goliath Gold for R348 040 from Mr W Geyer, which acquisitions form part of the Goliath Gold Acquisition; “Afriwiftcom” means Afriwiftcom Investment Holdings Limited (registration number 106509), a private company incorporated in accordance with the laws of the Republic of Mauritius, the shareholders of which are NinetyEast Trustees (Mauritius) Limited as trustee of the JP Trust (50%) and NinetyEast Trustees (Mauritius) Limited as trustee of the HA LNC Trust (50%); “ASOF” AfrAsia Special Opportunities Fund (registration number 101312), a public company incorporated in accordance with the laws of Mauritius, a registered collective investment scheme regulated by the Financial Services Commission in Mauritius and the directors of which are L How Ah Chong, K Padayachy, S Nuthay, R Wood-Collier and D Etienne; “ASOF Sale and Purchase means the agreement dated 5 September 2014 concluded between Stellar Agreement” Capital and ASOF in terms of which Stellar Capital acquired: – 29.78% of MRI from ASOF for R24 822 664, which acquisition forms part of the MRI Acquisition; and – 4.99% of Goliath Gold for R14 700 000, which acquisition forms part of the Goliath Gold Acquisition; “Chrystalpine” means Chrystalpine Investments 9 Proprietary Limited (registration number 2008/024785/07), a private company incorporated in accordance with the laws of South Africa, which Company is the 100% holding company of Contract Kitting; “ClucasGray” means ClucasGray Future Titans Prescient Fund, a fund managed by ClucasGray Proprietary Limited, the directors of which are Messrs P Carter, CL Clucas, JP Clucas and PLB Clucas; “Contract Kitting” means Andrews Kit Proprietary Limited (registration number 2001/000793/07), a private company incorporated in accordance with the laws of South Africa and trading as Contract Kitting, a wholly-owned subsidiary of Chrystalpine; “Contract Kitting means the disposal by Stellar Capital of 100% of Stellar Capital’s interest in Disposal” Contract Kitting (through the sale of 100% of the shares in Chrystalpine, being the holding company of Contract Kitting) to Tellumat for R95 119 000 in terms of the Tellumat Sale and Purchase Agreement, which transaction constituted a disposal by Stellar Capital in terms of section 112 of the Companies Act;
52 “Contract Kitting Sale means the sale consideration of R95 119 000 payable by Tellumat in respect Consideration” of the Contract Kitting Disposal, which amount was settled by Tellumat by way of the issue of ordinary shares in Tellumat; “Crater Valley means Crater Valley Property Investments Proprietary Limited (registration Investments” number 1997/017023/07), a private company incorporated in accordance with the laws of South Africa, the sole shareholder of which is Kepaka Holdings; “ConvergeCom” means ConvergeCom Proprietary Limited (registration number 2008/013750/07), a private company incorporated in accordance with the laws of South Africa, the purchaser in respect of the Telesto Disposal and the sole director and shareholder of which is DF Bisschoff; “Crater Valley Sale and means the agreement dated 5 September 2014 concluded between Purchase Agreement” Stellar Capital and Crater Valley Investments in terms of which Stellar Capital acquired 0.93% of Goliath Gold from Crater Valley Investments for R2 736 418, which acquisition forms part of the Goliath Gold Acquisition; “Dale Sale and Purchase means the agreement dated 5 September 2014 concluded between Stellar Agreement” Capital and Dale International Trust Company in terms of which Stellar Capital acquired from Dale International Trust Company: – 2.02% of Digicore for R12 500 000, which acquisition forms part of the Digicore Acquisition; and – 4.93% of Goliath Gold for R14 518 628, which acquisition forms part of the Goliath Gold Acquisition; “Dale International Trust means Dale International Trust Company Limited (registration number Company” B173213), a public company incorporated in accordance with the laws of Mauritius, acting as trustees of The Salty Portfolio Trust; “Goliath Gold” means Goliath Gold Mining Limited (registration number 1933/004523/06), a public company incorporated in accordance with the laws of South Africa on 3 May 1933, the shares of which are listed on the Main Board of the JSE, having its registered address at Constantia Office Park, Bridgeview House, cnr 14th Avenue & Hendrik Potgieter Road, Weltevreden Park; “Goliath Gold Acquisition” means the acquisition by Stellar Capital of an additional 21.77% of Goliath Gold for an aggregate amount of R64 169 742 in terms of the ASOF Sale and Purchase Agreement, Trinity Sale and Purchase Agreement, Titan Sale and Purchase Agreement, Dale Sale and Purchase Agreement, Crater Valley Sale and Purchase Agreement and Additional Goliath Gold Acquisition Sale and Purchase Agreement; “MRI” means Mine Restoration Investments Limited (registration number 1987/004821/06), a public company incorporated in accordance with the laws of South Africa on 5 October 1987, the shares of which are listed on the Main Board of the JSE, having its registered address at Route 21 Corporate Park, 45 Sovereign Drive, Ground Floor, Unit C, Irene X30; “MRI Acquisition” means the purchase by Stellar Capital of an additional 30.32% of MRI for an aggregate amount of R25 272 664 in terms of the ASOF Sale and Purchase Agreement and Titan Sale and Purchase Agreement; “Pannar Group” means Pannar Group Pension Plan (registration number 12/8/16525); “Private Placement” means the specific issue of 75 million Stellar Capital shares for cash at a subscription price of R2.00 per share, amounting to an aggregate total consideration of R150 million; “SCS” means Structured Connectivity Solutions Proprietary Limited (registration number 2002/001640/07), a private company incorporated in accordance with the laws of South Africa; “SCS Disposal” means the disposal by Stellar Capital of 100% of Stellar Capital’s interest in SCS to Tellumat for R5 million in terms of the Tellumat Sale and Purchase Agreement;
53 “SCS Sale Consideration” means the sale consideration of R5 000 000 payable by Tellumat in respect of the SCS Disposal, which amount was settled by Tellumat by way of the issue of ordinary shares in Tellumat; “SIMAT Group” means SIMAT Group (registration number 106476), a private company incorporated in accordance with the laws of the Republic of Mauritius; “SIMAT SA” means SIMAT Management Company Proprietary Limited (registration number 2006/032935/07), a private company incorporated in accordance with the laws of South Africa, in which Stellar Capital held a 51% interest; “Sizwe” means Sizwe Africa IT Group Proprietary Limited (registration number 2000/020258/07), a private company incorporated in accordance with the laws of South Africa; “Sizwe Acquisition” means the acquisition by Stellar Capital of 25% of the issued share capital of Sizwe from Yellow Star in terms of the Yellow Star Sale of Shares Agreement, as detailed in the circular of 12 February 2013; “Sizwe Disposal” means the disposal by Stellar Capital of 100% of its interest in Sizwe to Zaloserve for R120 000 000, which transaction constituted a disposal by Stellar Capital in terms of section 112 of the Companies Act, as approved by shareholders in general meeting on 22 October 2013; “Telesto” means Telesto Communications Proprietary Limited (registration number 1999/002229/07), a private company incorporated in accordance with the laws of South Africa, a wholly-owned subsidiary of the Company; “Telesto Disposal” means the disposal by Stellar Capital of 100% of Stellar Capital’s interest in Telesto to ConvergeCom for R7 300 000 in terms of the Telesto Sale of Shares Agreement, as approved by shareholders on 22 October 2014; “Tellumat” means Tellumat Proprietary Limited (registration number 1996/000957/07), a private company incorporated in accordance with the laws of South Africa on 29 January 1996, having its registered address at 64-74 White Road, Retreat; “Tellumat Consideration means convertible ordinary class “A” shares in the issued share capital of Shares” Tellumat, which shares (i) comprise 30% of the total issued share capital of Tellumat, (ii) entitle the holder to a 30% equity interest in Tellumat and rank pari passu with the ordinary shares in Tellumat, save in respect of any entitlement to the net proceeds of the Tellumat Pension Fund employer surplus, and (iii) will automatically convert into ordinary shares in Tellumat on the distribution of the Tellumat Pension Fund employer surplus; “Tellumat Acquisition” means the acquisition by Stellar Capital of the Tellumat Consideration Shares, by way of the issue by Tellumat of the Tellumat Consideration Shares in settlement of the Contract Kitting Sale Consideration and SCS Sale Consideration; “Tellumat Sale and means the agreement dated 13 November 2014 concluded between Stellar Purchase Agreement” Capital, Contract Kitting, SCS and Tellumat in terms of which the Contract Kitting Disposal, SCS Disposal and Tellumat Acquisition are proposed to be effected; “Trinity Asset Trinity Asset Management Proprietary Limited (registration number Management” 1996/010864/07), a private company incorporated in accordance with the laws of South Africa, the sole director of which is Q George; “Titan” means, collectively, Titan Nominees and its associated entities, including Titan Premier and Titan Share Dealers;
54 “Titan Sale and Purchase means the agreement dated 5 September 2014 concluded between Stellar Agreement” Capital and Titan in terms of which Stellar Capital acquired: – 12.00% of Digicore from Titan Nominees for R74 312 500; – 3.62% of Digicore from Titan Share Dealers for R22 419 425 (which acquisitions form part of the Digicore Acquisition); – 0.54% of MRI from Titan Share Dealers for R450 000, which acquisition forms part of the MRI Acquisition; and – 2.13% of Goliath Gold from Titan Share Dealers for R6 268 780, which acquisition forms part of the Goliath Gold Acquisition; “Titan Nominees” means Titan Nominees Proprietary Limited (registration number 1978/003570/07), a private company incorporated in accordance with the laws of South Africa, the directors of which are Dr CH Wiese and Messrs IHJ Visagie and JD Wiese and the controlling shareholder of which is Dr CH Wiese; “Titan Share Dealers” means Titan Share Dealers Proprietary Limited (registration number 1969/003884/07), a private company incorporated in accordance with the laws of South Africa, the directors of which are Dr CH Wiese and Mr JD Wiese; “Titan Nominees” Titan Nominees Proprietary Limited (registration number 1978/003570/07), a private company incorporated in accordance with the laws of South Africa, the directors of which are CH Wiese and JD Wiese and the sole shareholder being Titan Premier Investments Proprietary Limited; “Titan Premier means Titan Premier Investments Proprietary Limited (registration number Investments” 1979/000776/07), a private company incorporated in accordance with the laws of South Africa, the directors of which are Dr CH Wiese and Messrs IHJ Visagie and JD Wiese and the controlling shareholder of which is Dr CH Wiese; “Trinity Sale and Purchase means the agreement dated 5 September 2014 concluded between Stellar Agreement” Capital and Trinity Asset Management in terms of which Stellar Capital acquired 3.33% of Goliath Gold for R9 817 976, which acquisition forms part of the Goliath Gold Acquisition; “Titantrade” Titantrade 306 Proprietary Limited (registration number 2002/017223/07), a private company incorporated in accordance with the laws of South Africa and the directors of which are H van Dyk and A van Dyk; “Underwriting means the agreements dated 5 September 2014 between Stellar Capital and Agreement(s)” the Private Placement Underwriters in terms of which the Private Placement Underwriters will underwrite the balance of the Private Placement Amount not subscribed for, to be underwritten by Titan Premier Investments (or its nominee) in respect of 50% of the Company shares not placed by the Last Practicable Date, Lavender Sky Investments 40 Proprietary Limited (registration number 2011/002794/07) in respect of 25% of the Company shares not placed by the Last Practicable Date and Thunder Capital Proprietary Limited (registration number 2007/028624/07) in respect of 25% of the Company shares not placed by the Last Practicable Date, for an underwriting fee of 5% of the amount underwritten, payable by way of the issue of new shares in the Company at R2.00 per share. The Underwriting Agreements became irrevocable on 12 December 2014;
55 “X-DSL” means X-DSL Networking Solutions Proprietary Limited (registration number 2002/024167/07), a private company incorporated in accordance with the laws of South Africa in which Stellar Capital held a 66% interest and D Fourie and M van Dyk held the balance of 34% in equal portions; “Yellow Star” means Yellow Star Group Holdings Proprietary Limited (registration number 2005/004789/07), a private company incorporated in accordance with the laws of South Africa and the directors of which are H van Dyk, CE Pettit and Q George; “Yellow Star Sale of means the agreement dated 22 November 2012 concluded between Yellow Shares Agreement” Star and Stellar Capital in terms of which the Sizwe Acquisition was effected; and “Zaloserve” means Zaloserve Proprietary Limited (registration number 2012/179283/07), a private company incorporated in accordance with the laws of South Africa, the purchaser in respect of the Sizwe Acquisition.
Save for the Company undertaking the Cadiz Acquisition and Digicore Disposal and entering into the Tellumat Sale and Purchase Agreement, Titan Sale and Purchase Agreement, Dale Sale and Purchase Agreement, ASOF Sale and Purchase Agreement, Trinity Sale and Purchase Agreement, and Crater Valley Sale and Purchase Agreement (in terms of which the Company disposed of 100% of its interest in Contract Kitting and SCS and acquired material stake in Tellumat, Digicore, MRI and Goliath Gold), as well as the Subscription Agreements and Private Placement and Underwriting Agreements, the Company and its subsidiaries have entered into the following material contracts and transactions, which are out of the ordinary course of business, during the two years preceding this Circular:
• On 8 December 2014 Stellar Capital concluded the Management Agreement in terms of which ManCo manages the portfolio of the Company in accordance with Section 15 of the Listings Requirements, the salient terms of which are detailed in Appendix 2 of the Revised Listing Particulars. • No amounts were paid by Stellar Capital with respect to goodwill in relation to the material contracts entered into by Stellar Capital during the three years prior to the date of this Circular.
56 APPENDIX 2
SALIENT TERMS OF THE MANAGEMENT AGREEMENT
The salient terms of the Management Agreement are detailed below:. 1. Appointment ManCo has been appointed as the management company of Stellar Capital pursuant to the Management Agreement in terms of which ManCo will manage the portfolio of Stellar Capital in accordance with Section 15 of the Listings Requirements. 2. Services In giving effect to its appointment as the management company of Stellar Capital, ManCo will provide, inter alia, the following services: 2.1 give general business management advice to the Board, and it is agreed, for the purposes of clarity, that the Board shall in good faith consider all advice given to it by ManCo in respect of the Company, but that the Board shall not be bound or obliged to follow such advice unless the Board in its own discretion so resolves; 2.2 appoint, for and on behalf of the Company and on terms and conditions acceptable to the Company, a suitably qualified financial services provider, as contemplated in the Financial Advisory and Intermediary Services Act, No 37 of 2002 (the “FAIS Act”) (the “Investment Adviser”) to provide financial advisory and intermediary services to the Company, and in particular to advise the Company on the following aspects – 2.2.1 identify and evaluate suitable investment opportunities consistent with the Company’s investment mandate and objective; and 2.2.2 consider the disposal of any investments and the encumbering of any of the investments and/or other assets of the Company; 2.3 ensure that the Investment Adviser from time to time – 2.3.1 identifies suitable investments consistent with the Company’s investment mandate and objective; and 2.3.2 makes recommendations to the Board in relation to (1) the disposal of any of the Company’s investments, and (2) the creation of any encumbrance over any of the assets of the Company in favour of any person; 2.4 ensure, by engaging with the Investment Adviser, that the Investment Adviser from time to time prepares proposals to the Board for – 2.4.1 the acquisition of any investment by the Company; 2.4.2 the disposal of any investment held by the Company; and/or 2.4.3 the creation of any encumbrance by the Company over any of its assets; 2.5 ensure that the Investment Adviser complies with the obligations of the mandate entered into between the Company and the Investment Manager; 2.6 conduct or manage appropriate technical, financial and legal due diligence investigations of any potential investments identified by the Company’s advisers and advise the Company of the results; 2.7 render investment research to the Company in respect of investments or potential investments, and provide such research to the Investment Adviser; 2.8 subject to the FAIS Act, advise the Company on the appropriate vehicle for any investments to be made by the Company; 2.9 subject to the FAIS Act, advise the Company on the most appropriate method of structuring any investments made by the Company; 2.10 negotiate on behalf of, and advise, the Company on the terms of any agreements to be concluded by the Company pursuant to investments being made, and once such agreements have been concluded (1) use commercially reasonable endeavours to ensure that the Company complies with all its obligations under the applicable agreements, and (2) from time to time report to the Board (in such a manner as the Board may from time to time require) in relation to the extent to which the Company has complied with its obligations under the applicable agreements, and (3) monitor the performance of the applicable counterparty under the applicable agreements and report to the Board in relation to the counterparty’s performance;
57 2.11 if any person with whom the Company has concluded any agreement of any nature whatsoever fails to comply with its obligations under that agreement the Investment Manager shall – 2.11.1 take such steps as may be reasonably appropriate in the circumstances in order to protect the Investor’s interests under the applicable agreement; 2.11.2 report as soon as may be reasonably possible to the Board in relation to the circumstances which arose and the steps which the Manager has taken in order to deal with those circumstances; 2.11.3 obtain instructions from the Board in relation to the manner in which it must deal with the matter in the future; and 2.11.4 use commercially reasonable endeavours to implement any instructions thus given to it by the Board; 2.12 appoint directors to the board of directors of Investee Companies in which the Company invests, provided that if the Board (acting reasonably) is not satisfied with the appointees, the Board may request Stellar Advisers to appoint alternative directors and ManCo must comply with this request; 2.13 monitor the investments on an ongoing basis to determine the performance of the Company. 3. Fees The basis on which, the manner in which and the intervals at which the Company will remunerate ManCo for the services rendered, as detailed in paragraph 2 above, are set out as follows: 3.1 Management fee 3.1.1 The management fee shall be paid quarterly in arrears, and shall be an amount determined in accordance with the following table –
Management Fee (as % of Net Asset Value Net Asset Value (NAV) First R500,000,000 (five hundred 2% (two percent) on such R500,000,000 million rand) of NAV (five hundred million rand) of NAV Second R500,000,000 (five hundred 1,5 (one comma five percent) on such million rand) of NAV R500,000,000 (five hundred million rand) of NAV For NAV in excess of R1,000,000,000 1% (one percent) on such excess over (one billion rand) (including cash and R1,000,000,000 (one billion rand) of NAV less any debt) 3.1.2 The management fee shall be calculated on each relevant measurement date, and based on the most recent valuation (as defined in the Management Agreement). 3.2 Performance fee 3.2.1 In addition to the management fee referred in paragraph 3.1 above, ManCo will be entitled to a performance fee in respect of each quarter of the subsistence of the Management Agreement if the returns of the Company for the relevant quarter are positive. 3.2.2 The performance fee shall be calculated in accordance with the following formula – A = 20/100 x (B – C) where A = the performance fee payable for the relevant quarter; B = the Net Asset Value (after adding back the management fee deducted in terms of paragraph 3.1 above); and C = the previous highest Net Asset Value, as recorded at the end of any particular quarter prior to the relevant quarter.
58 3.2.3 In the event that the determination of the performance fee yields a negative number, then – 3.2.3.1 no performance fee will be payable for that quarter; and 3.2.3.2 such negative number shall not be construed as giving rise to an obligation on the part of ManCo to make any payment to the Company. 3.2.4 The performance fee will be paid or settled, at the election of the Company – 3.2.4.1 in cash or by way of electronic funds transfer, free of deduction or set-off; or 3.2.4.2 by way of issuing to ManCo so many shares amount calculated in accordance with the following formula – where a, is the number of shares to be issued to ManCo in settlement of the performance fee; b, is the amount of the relevant performance fee, as reflected in the concomitant performance fee statement issued by ManCo; and c, is the VWAP of the shares for the 30 (thirty) trading days immediately preceding the last day of the quarter to which the performance fee relates, provided that, to the extent that – (i) the number of shares to be issued by the Company pursuant to paragraph 3.2.4.2 in any financial year would exceed 15% of the issued share capital of the Company; and/or (ii) the number of shares to be issued by the Company pursuant to paragraph 3.2.4.2 would result in ManCo holding in excess of 34.99% of the issued share capital of the Company, then the Company will issue shares up to the lower of the maximum number of shares permitted under paragraphs (i) and (ii) above, and the Company will pay ManCo, in cash without deduction or set-off, the balance of the performance fee payable and not settled by way of the issue of shares. 4. Exclusivity 4.1 ManCo may not perform the management provided by it to the Company to any other person whose business is in competition with that of the Company. 4.2 The Company shall not procure the management services provided by to ManCo from any other person, save by prior agreement. 5. Duration and Termination 5.1 The Management Agreement will be in full force and effect: 5.1.1 until the third anniversary of the signature date thereof, when it shall automatically terminate; or 5.1.2 terminated by either party by giving the other party not less than six months’ notice in writing of such termination. 5.2 If the Management Agreement is terminated by the Company – 5.2.1 within the first 36 (thirty six) months after the Signature Date for any reason other than ManCo committing a material breach of the agreement by or being wound up or business rescue; or 5.2.2 automatically on the third anniversary of the Signature Date, then the Company shall pay to ManCo a termination fee (the “Termination Fee”), equal to 15% of the market capitalisation of the Company (based on the 30 day VWAP as at the date of termination). 5.3 The Company shall pay the Termination Fee in cash (in the case of termination pursuant to paragraph 5.2.1.1) or shares in the Company (in the case of termination pursuant to paragraph 5.2.1.2) to ManCo within 10 business days of the effective date of the termination.
59 APPENDIX 3
LOANS RECEIVABLE
Stellar Capital has the following loans receivable:
1. Name of the Borrower Ganefin 2 (Pty) Ltd Amount* R32 849 049 Advance Date 14 August 2015 Term Term loan repayable on or before 30 August 2015 Conditions of repayment The borrower shall repay the loan in a single, bullet payment on or before 14 August 2017. - Interest shall be accrued daily and be payable monthly in arrears, with the first interest payment due on 31 August 2015. - Prepayments in minimum amounts of R5,0 million shall be allowed provided that no less than 30 calendar days’ notice must be given to the Lender in writing. Any prepayment made by the Borrower within six months of the Advance Date shall attract a pro rata prepayment penalty equal to 2 months’ interest for prepayment in full. - The Borrower shall be obliged to prepay the Amount on a change of control. Pricing 26.5% per annum (serviced monthly in arrears) and 1.25% raising fee (capitalized to Amount) Repayment On or before 14 August 2017 Security provided Senior secured Details of security provided As security for the due, proper and timeous payment and performance in full of the loan, the borrower has ceded in securitatem debiti listed shares at a share cover ratio of 2.93x the loan with right to call for a top up of shares. Corporate guarantees have been provided by the holding company and ultimate holding company of the Borrower. Conversion or redemption rights None Purpose of loan An investment to generate high levels of current income for Stellar Capital. * Stellar Capital is a participant in a syndicated loan
60 2. Name of the Borrower K2014263630 (Pty) Ltd Amount* R40 062 957 Advance Date 14 August 2015 Term Loan is repayable on or before 14 August 2017 Conditions of repayment The borrower shall repay the loan in a single, bullet payment on or before 14 August 2017. - Interest shall be accrued daily and be payable monthly in arrears, with the first interest payment due on 31 August 2015. - Prepayments in minimum amounts of R5,0 million shall be allowed provided that no less than 30 calendar days’ notice must be given to the Lender in writing. Any prepayment made by the Borrower within six months of the Advance Date shall attract a pro rata prepayment penalty equal to 2 months’ interest for prepayment in full. The Borrower shall be obliged to prepay the Amount on a change of control. Pricing 26.5% per annum (serviced monthly in arrears) and 1.25% raising fee (capitalized to Amount) Repayment On or before 14 august 2017 Security provided Senior secured Details of security provided The Borrower has ceded in securitatem debiti the unlisted shares in its holding company valued at 4.3x cover. Corporate guarantees have been provided by the holding company and ultimate holding company of the Borrower. Cross-default provisions apply between the Ganefin 2 (Pty) Ltd loan and the loan to Ganefin 5 (Pty) Ltd. Conversion or redemption rights None Purpose of loan An investment to generate high levels of current income for Stellar Capital. * Stellar Capital is a syndication party to the loan
61 3. Name of the Borrower Praxis Financial Services (Pty) Ltd Amount* R41 172 317 Term Loan is repayable on 30 November 2016 Conditions of repayment The borrower shall repay the loan in a single, bullet payment on or before 30 November 2016. The Borrower may make prepayments in minimum amounts of R5 million on 30 days’ notice. Average interest rate 2% per month, payable month Repayment 17 October 2016 Security provided Secured Details of security provided The Borrower has ceded its insurance policies, bank accounts to the Lender as well as its inventory and movable property in terms of a general notarial bond. Conversion or redemption rights None Purpose of loan An investment to generate high levels of current income for Stellar Capital. Directors and business address of Grant David Patton, Howard Walker, Murray Jacklin and Ryan directors of the Borrower Wood-Collier 45 Old Main Road, Kloof, Durban. 3610 * Stellar Capital is a syndication party to the loan
4. Name of the Borrower Titan Financial Services (Pty) Ltd Amount* R25 000 000 Term Repayable on or before 30 September 2015 Average interest rate Non-interest bearing deposit Repayment On or before 30 September 2015 Security provided Secured Details of security provided The Borrower has ceded its shares in an unlisted company. Conversion or redemption rights None Purpose of loan Deposit in relation to a company under due diligence by Stellar Capital. Directors and business address of Isak Visagie, Christo Wiese and Jacob Wiese directors of the Borrower 36 Stellenberg Road, Parow Industria, 7501
62 5. Name of the Borrower IE Rentals (Pty) Ltd Amount R7.7 million Advance date 31 July 2015 Term 60 months Conditions of repayment The loan is repaid in monthly instalments of R 217,211 Average interest rate 17.9% per annum Repayment The loan shall be fully repaid on or before 31 May 2020 Details of security provided Cession in securitatem debiti of book debts and bank accounts of IE Rentals (Pty) Ltd. IE Rentals (Pty) Ltd shareholder guarantee and cession in securitatem debiti of all shares in IE Rentals (Pty) Ltd not held by Stellar Capital. Conversion or redemption rights None Purpose of loan An investment to generate high levels of current income for Stellar Capital. Directors and business address of Annabel Mead directors of the Borrower 8 Scorpio Lane, Croydon Vineyard Estate, Somerset West, 7130
6. Name of the Borrower IE Rentals (Pty) Ltd Amount R2.4 million Advance date 31 July 2015 Term Amounts are advanced in terms of a draw down facility and are repayable within 70 months of the date of advance Conditions of repayment Interest is payable on a monthly basis. Average interest rate Prime plus 5% per annum Repayment Repayment of the amount advance shall not exceed 70 months from the relevant advance date Details of security provided Cession in securitatem debiti of book debts and bank accounts of IE Rentals (Pty) Ltd. IE Rentals (Pty) Ltd shareholder guarantee and cession in securitatem debiti of all shares in IE Rentals (Pty) Ltd not held by Stellar Capital. Conversion or redemption rights None Purpose of loan An investment to generate high levels of current income for Stellar Capital. Directors and business address of Annabel Mead directors of the Borrower 8 Scorpio Lane, Croydon Vineyard Estate, Somerset West, 7130
63 APPENDIX 4
EXTRACTS FROM MEMORANDUM OF INCORPORATION
This Appendix 4 details various provisions of the Memorandum of Incorporation of Stellar Capital, as required in terms of the Listings Requirements. In each case, the numbering and wording below matches that of the applicable provisions in the Memorandum of Incorporation. “10. ISSUE OF SHARES AND VARIATION OF RIGHTS 10.1 The Company is authorised to issue – 10.1.1 Ordinary Shares with no par value, of the same class, each of which ranks pari passu in respect of all rights and entitles the holder to 10.1.1.1 vote on any matter to be decided by the Shareholders and to 1 (one) vote in the case of a vote by means of a poll; 10.1.1.2 participate proportionally in any distribution made by the Company; and 10.1.1.3 receive proportionally the net assets of the Company upon its liquidation; 10.1.2 such number of each of such further classes of Shares, if any, as are set out in Schedule 1 hereto subject to the preferences, rights, limitations and other terms associated with each such class set out therein. 10.2 All Securities in each class for which a listing on the JSE is applied shall rank pari passu (as this term is understood in paragraph 3.29 of the JSE Listings Requirements). 10.3 The Board shall not have the power to – 10.3.1 create Shares of any class; or 10.3.2 convert one class of shares into one or more other classes; or 10.3.3 increase or decrease the number of authorised Shares of any class of the Shares; or 10.3.4 consolidate and reduce the number of the Company’s issued and authorised Shares of any class; or 10.3.5 subdivide its Shares of any class by increasing the number of its issued and authorised Shares of that class without an increase of its capital; or 10.3.6 reclassify any classified Shares that have been authorised but not issued; or 10.3.7 classify any unclassified Shares that have been authorised but not issued; or 10.3.8 vary the preferences, rights, limitations or other terms of any Shares, or 10.3.9 change the name of the Company, and such powers shall only be capable of being exercised by the Shareholders by way of a special resolution of the Shareholders. 10.4 Each Share issued by the Company has associated with it an irrevocable right of the Shareholder to vote on any proposal to amend the preferences, rights, limitations and other terms associated with that Share as contemplated in clause 27.2. 10.5 The authorisation and classification of Shares, the number of authorised Shares of each class, and the preferences, rights, limitations and other terms associated with each class of Shares as set out in this Memorandum of Incorporation may be changed only by an amendment of this Memorandum of Incorporation by special resolution of the Shareholders and in accordance with the JSE Listings Requirements, and such amendments shall not be implemented without a special resolution adopted by the holders of Shares of that class at a separate meeting. 10.6 If a fraction of a Share comes into being as a result of any corporate action such fraction will be subject to compliance with the JSE Listings Requirements’ rounding convention. 10.7 No Shares may be authorised in respect of which the preferences, rights, limitations or any other terms of any class of Shares may be varied in response to any objectively ascertainable external fact or facts as provided for in sections 37(6) and 37(7) of the Act. 10.8 The Company may only issue Shares which are fully paid up and freely transferable, unless otherwise required by statute, and only within the classes and to the extent that those Shares have been authorised by or in terms of this Memorandum of Incorporation. The JSE will not list shares that are not fully paid for upon listing.
64 10.9 The Board has control over all unissued shares per class and may, subject to clause 10.12 and the further provisions of this clause 10.9, resolve to issue Shares of the Company at any time and, where applicable, list such Shares on the applicable JSE market (“listing”) if – 10.9.1 the issue is within the classes and to the extent that those Shares have been authorised by or in terms of this Memorandum of Incorporation, but not yet issued; and 10.9.2 all requisite and applicable approvals of the JSE in relation to corporate actions, circulars and application letters have been obtained; 10.9.3 All issues of Shares for cash, including grants/issues of options and/or convertible securities must, in addition, be in accordance with the JSE Listings Requirements. 10.10 All Securities of the Company for which a listing is sought on the JSE and all Securities of the same class as Securities of the Company which are listed on the JSE must, notwithstanding the provisions of section 40(5) of the Act, only be issued after the Company has received the consideration approved by the Board for the issuance of such Securities and must be freely transferable. 10.11 Subject to what may be authorised by the Act, the JSE Listings Requirements and at meetings of Shareholders in accordance with clause 10.13, and subject to clause 10.12, the Board may only issue unissued “Equity Securities” (as defined in the JSE Listings Requirements)to raise cash or to settle outstanding liabilities or expenses if such Securities are issued in terms of a JSE approved rights offer or issue of shares for cash to existing shareholders on a pro-rata basis, unless the Equity Securities are to be issued for the acquisition of an asset. 10.12 Notwithstanding the provisions of clauses 10.3, 10.11 and 10.13, any issue of Shares, Securities convertible into Shares, or rights exercisable for Shares in a transaction, or a series of integrated transactions shall, in accordance with the provisions of section 41(3) of the Act, require the approval of the Shareholders by special resolution if the voting power of the class of Shares that are issued or are issuable as a result of the transaction or series of integrated transactions will be equal to or exceed 30% (thirty percent) of the voting power of all the Shares of that class held by Shareholders immediately before that transaction or series of integrated transactions. 10.13 Notwithstanding the provisions of clause 10.11, the Shareholders may at a general meeting authorise the Directors to issue Shares of the Company at any time and/or grant options to subscribe for Shares as the Directors in their discretion think fit, provided that such transaction(s) has/have been approved by the JSE and comply with the JSE Listings Requirements. 10.14 Except to the extent that any such right is specifically included as one of the rights, preferences or other terms upon which any class of Shares is issued or as may otherwise be provided in this Memorandum of Incorporation in accordance with the JSE Listings Requirements, no Shareholder shall have any pre-emptive or other similar preferential right to be offered or to subscribe for any additional Shares issued by the Company.” 32 COMPOSITION AND POWERS OF THE BOARD OF DIRECTORS 32.1 In addition to the minimum number of Directors that the Company must have to satisfy any requirement in terms of the Act to appoint an audit committee and a social and ethics committee, the Board shall not be less than 4 (four) nor more than 20 (twenty) Directors. 32.2 The composition of the Board shall, to the extent possible, be in accordance with the recommendations of the King Report on Corporate Governance for South Africa 2009, as updated, amended or replaced from time to time. 32.3 Subject to the provisions of clause 32.5, all Directors shall be elected by an ordinary resolution of the Shareholders at a general or annual general meeting of the Company and no appointment of a Director in accordance with a resolution passed in terms of section 60 shall be competent. 32.4 Every person holding office as a Director, prescribed officer, Company Secretary or auditor of the Company immediately before the effective date of the Act will, as contemplated in item 7(1) of Schedule 5 to the Act, continue to hold that office.
65 32.5 In any election of Directors – 32.5.1 the election is to be conducted as a series of votes, each of which is on the candidacy of a single individual to fill a single vacancy or as an addition to the Board, with the series of votes continuing until all vacancies on the Board have been filled; and 32.5.2 in each vote:– 32.5.2.1 each vote entitled to be exercised may be exercised once; and 32.5.2.2 the vacancy is filled only if a majority of the votes exercised support the candidate. 32.6 Subject to the power of the Directors to fill a vacancy or to add Directors to the Board in terms of clause 32.10.1, the Company shall only have elected Directors and there shall be no appointed or ex offıcio Directors appointed or any person named in this Memorandum of Incorporation able to nominate any person for appointment as a Director as contemplated in section 66(4) of the Act. 32.7 Apart from satisfying the qualification and eligibility requirements set out in section 69 of the Act, a person need not satisfy any eligibility requirements or qualifications to become or remain a Director or a prescribed officer of the Company. 32.8 No Director shall be appointed for life or for an indefinite period and the Directors shall rotate in accordance with the following provisions of clause 32.8 – 32.8.1 at each annual general meeting referred to in clause 25.3.1, 1/3 (one third) of the Directors for the time being, or if their number is not 3 (three) or a multiple of 3 (three), the number nearest to 1/3 (one third), but not less than 1/3rd 1/3 (one third), shall retire from office, provided that if a Director is appointed as managing Director or as an employee of the Company in any other capacity, he or she shall not, while he or she continues to hold that position or office, be subject to retirement by rotation and he or she shall not, in such case, be taken into account in determining the rotation or retirement of Directors; 32.8.2 the Directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who were elected as Directors on the same day, those to retire shall, unless they otherwise agree among themselves, be determined by lot; 32.8.3 a retiring Director shall be eligible for re-election, subject to him not being ineligible or disqualified from being a Director under the Act, other law or the JSE Listings Requirements; 32.8.4 the Company, at the general meeting at which a Director retires in the above manner, or at any other general meeting, may fill the vacancy by electing a person thereto, provided that the Company shall not be entitled to fill the vacancy by means of a resolution passed in accordance with clause 31; 32.8.5 if at any meeting at which an election of Directors ought to take place the offices of the retiring Directors are not filled, unless it is expressly resolved not to fill such vacancies, the meeting shall stand adjourned and the further provisions of this Memorandum of Incorporation, including clauses 25.8 to 25.11 (inclusive) will apply mutatis mutandis to such adjournment, and if at such adjourned meeting the vacancies are not filled, the retiring Directors, or such of them as have not had their offices filled, shall be deemed to have been re-elected at such adjourned meeting. 32.9 The Board, or through its nomination committee constituted in terms of clause 30, shall provide the Shareholders with a recommendation in the notice of the meeting at which the re-election of a retiring Director is proposed, as to which retiring Directors are eligible for re-election, taking into account that Director’s past performance and contribution.
66 32.10 The Board has the power – 32.10.1 to at any time from time to time appoint any person as a Director either to fill a casual vacancy or as an addition to the Board, but so that the total number of directors shall not at any time exceed the maximum number fixed and as set out in section 68(3) of the Act, provided that such appointment must be confirmed by the Shareholders, in accordance with clauses 32.3 and 29.4, at the next annual general meeting of the Company, as required in terms of section 70(3)(b)(i) of the Act; and 32.10.2 exercise all of the powers and perform any of the functions of the Company, as set out in section 66(1) of the Act, and the powers of the Board in this regard are only limited and restricted as contemplated in this clause 32. 32.11 Subject to the provisions of the Companies Act, the Company may by Ordinary Resolution remove any Director before the expiration of his period of office and by an Ordinary Resolution elect another Person in his stead. The Person so elected shall hold office until the next following Annual General Meeting of the Company and shall then retire and be eligible for re-election. 32.12 The Company may .by Ordinary Resolution in General Meeting from time to time increase (or reduce, but not below 4 (four)) the number of Directors and may also determine in what manner or rotation such increased (or reduced) number is to go out of office. Whenever such increase is made the members at the said Meeting or failing them the Board may fill the new seats so created. 32.13 The Directors may at any time and from time to time by power of attorney appoint any person or persons to be the attorney or attorneys and agent(s) of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors in terms of this Memorandum of Incorporation) and for such period and subject to such conditions as the Directors may from time to time think fit. Any such appointment may, if the Directors think fit, be made in favour of any company, the shareholders, directors, nominees or managers of any company or firm, or otherwise in favour of any fluctuating body of persons, whether nominated directly or indirectly by the Directors. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorneys and agents as the Directors think fit. Any such attorneys or agents as aforesaid may be authorised by the Directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in them. 32.14 Save as otherwise expressly provided herein, all cheques, promissory notes, bills of exchange and other negotiable or transferable instruments, and all documents to be executed by the Company, shall be signed, drawn, accepted, endorsed or executed, as the case may be, in such manner as the Directors shall from time to time determine. 32.15 All acts performed by the Directors or by a committee of Directors or by any person acting as a Director or a member of a committee shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment of the Directors or persons acting as aforesaid, or that any of them were disqualified from or had vacated office, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director or member of such committee. 32.16 If the number of Directors falls below the minimum number fixed in accordance with this Memorandum of Incorporation, the remaining Directors must as soon as possible and in any event not later than 3 (three) months from the date that the number falls below such minimum, fill the vacancy/ies in accordance with clause 32.10.132.10.1 or convene a general meeting for the purpose of filling the vacancies, and the failure by the Company to have the minimum number of Directors during the said 3 (three) month period does not limit or negate the authority of the board of Directors or invalidate anything done by the board of Directors while their number is below the minimum number fixed in accordance with this Memorandum of Incorporation.
67 32.17 The Directors in office may act notwithstanding any vacancy in their body, but if after the expiry of the 3 (three) month period contemplated in clause 32.16, their number remains below the minimum number fixed in accordance with this Memorandum of Incorporation, they may, for as long as their number is reduced below such minimum, act only for the purpose of filling vacancies in their body in terms of section 68(3) of the Act or of summoning general meetings of the Company, but not for any other purpose, provided that if there is no director able or willing to act, then any Ordinary Shareholder may convene a General Meeting for that purpose. 32.18 A Director may hold any other office or place of profit under the Company (except that of auditor) or any subsidiary of the Company in conjunction with the office of Director, for such period and on such terms as to remuneration (in addition to the remuneration to which he may be entitled as a Director) and otherwise as a disinterested quorum of the Directors may determine. 32.19 A Director of the Company may be or become a director or other officer of, or otherwise interested in, any company promoted by the Company or in which the Company may be interested as shareholder or otherwise, provided that the appointment and remuneration in respect of such other office must be determined by a disinterested quorum of Directors. 32.20 Each Director and each alternate Director, prescribed officer and member of any committee of the Board (whether or not such latter persons are also members of the Board) shall, subject to the exemptions contained in section 75(2) of the Act and the qualifications contained in section 75(3) of the Act, comply with all of the provisions of section 75 of the Act in the event that they (or any person who is a related person to them) has a personal financial interest in any matter to be considered by the Board. 32.21 A decision by the Board, or a transaction or agreement approved by the Board is valid despite any Personal Financial Interest of a Director or person related to the Director, if the provisions of this clause 32.21 have been complied with or if the transaction or agreement has been ratified by an Ordinary Resolution of the Shareholders, subject to the JSE Listings Requirements. 32.22 Nothing in this clause shall be construed so as to prevent any Director as a Shareholder from taking part in a General Meeting whether or not such Director shall be personally interested or concerned in such matters. It is hereby declared pursuant to the provisions of the Companies Act that although the Board shall have power to enter into a provisional contract for the sale or alienation of the undertaking of the Company, or the whole or the greater part of the assets of the Company, such provisional contract shall become binding on the Company only in the event of the specific transaction proposed by the Board complying with the requirements of the Companies Act. 32.23 Without in any way derogating from the obligations of a Director in terms of section 72(3) of the Companies Act, the Board shall have power to delegate to any Person or Persons any of their powers and discretions and to give to any such Person or Persons power of sub-delegation. 32.24 The proposal of any resolution to Shareholders in terms of sections 20(2) and 20(6) of the Act, to permit or ratify an act of the Directors that is inconsistent with any limitation or restriction imposed by this Memorandum of Incorporation, or the authority of the Directors to perform such an act on behalf of the Company, must be prohibited in the event that such a resolution would lead to the ratification of an act contrary to the JSE Listings Requirements.” 38 BORROWING POWERS 38.1 Subject to the provisions of clause 38.2 and the other provisions of this Memorandum of Incorporation, the Directors may from time to time 38.1.1 borrow for the purposes of the Company such sums as they think fit; and 38.1.2 secure the payment or repayment of any such sums, or any other sum, as they think fit, whether by the creation and issue of Securities, mortgage or charge upon all or any of the property or assets of the Company.
68 38.2 The Directors shall procure (but as regards subsidiaries of the Company only insofar as by the exercise of voting and other rights or powers of control exercisable by the Company they can so procure) that the aggregate principal amount at any one time outstanding in respect of moneys so borrowed or raised by – 38.2.1 the Company; and 38.2.2 all the subsidiaries for the time being of the Company (excluding moneys borrowed or raised by any of such companies from any other of such companies but including the principal amount secured by any outstanding guarantees or suretyships given by the Company or any of its subsidiaries for the time being for the indebtedness of any other company or companies whatsoever and not already included in the aggregate amount of the moneys so borrowed or raised), shall not exceed the aggregate amount at that time authorised to be borrowed or secured by the Company or the subsidiaries for the time being of the Company (as the case may be). 42 DISTRIBUTIONS 42.1 Subject to the provisions of the Act, and the JSE Listings Requirements applicable to dividends and payments to shareholders, and particularly section 46 of the Act, the Company may make a proposed distribution, being dividends or capital payments, as defined and contemplated in the Act and the JSE Listings Requirements, if such distribution – 42.1.1 is pursuant to an existing legal obligation of the Company, or a court order; or 42.1.2 is authorised by resolution of the Board, in compliance with the JSE Listings Requirements, including the declaration and payment of dividends and that capital shall be repaid upon the basis that it may not be called up again. 42.2 No distribution shall bear interest against the Company, except as otherwise provided under the conditions of issue of the Shares in respect of which such distribution is payable. 42.3 Distributions shall be declared in the currency of South Africa. 42.4 Distributions may be declared either free of or subject to the deduction of income tax and any other tax or duty in respect of which the Company may be chargeable. 42.5 The Directors may from time to time declare and pay to the Shareholders such interim distributions as the Directors consider to be appropriate. 42.6 Dividends are declared by the Directors in accordance with the Act. 42.7 All unclaimed dividends may be invested or otherwise made use of by the Directors for the benefit of the Company until claimed, provided that dividends unclaimed for a period of 3 (three) years from the date on which they were declared may be declared forfeited by the Directors for the benefit of the Company. The Directors may at any time annul such forfeiture upon such conditions (if any) as they think fit. All unclaimed monies, other than dividends, that are due to any Shareholder/s shall be held by the Company in trust for an indefinite period (but subject to the laws of prescription) until lawfully claimed by such Shareholder/s. 42.8 Any distribution, interest or other sum payable in cash to the holder of a Share may be paid by cheque or warrant sent by post and addressed to - 42.8.1 the holder at his registered address; or 42.8.2 in the case of joint holders, the holder whose name appears first in the Securities Register in respect of the share, at his registered address; or 42.8.3 such person and at such address as the holder or joint holders may in writing direct. 42.9 Every such cheque or warrant shall - 42.9.1 be made payable to the order of the person to whom it is addressed; and 42.9.2 be sent at the risk of the holder or joint holders. 42.10 The Company shall not be responsible for the loss in transmission of any cheque or warrant or of any document (whether similar to a cheque or warrant or not) sent by post as aforesaid.
69 42.11 A holder or any one of two or more joint holders, or his or their agent duly appointed in writing, may give valid receipts for any distributions or other moneys paid in respect of a Share held by such holder or joint holders. 42.12 When such cheque or warrant is paid, it shall discharge the Company of any further liability in respect of the amount concerned. 42.13 A distribution may also be paid in any other way determined by the Directors, and if the directives of the Directors in that regard are complied with, the Company shall not be liable for any loss or damage which a Shareholder may suffer as a result thereof. 42.14 Without detracting from the ability of the Company to issue capitalisation Shares, any distribution may be paid wholly or in part - 42.14.1 by the distribution of specific assets; or 42.14.2 by the issue of Shares, debentures or securities of the Company or of any other company; or 42.14.3 in cash; or 42.14.4 in any other way which the Directors or the Company in general meeting may at the time of declaring the distribution determine. 42.15 Where any difficulty arises in regard to such distribution, the Directors may settle that difficulty as they think expedient, and in particular may fix the value which shall be placed on such specific assets on distribution. 42.16 The Directors may - 42.16.1 determine that cash payments shall be made to any Shareholder on the basis of the value so fixed in order to secure equality of distribution; and 42.16.2 vest any such assets in trustees upon such trusts for the benefit of the persons entitled to the distribution as the Directors deem expedient. 42.17 Any distribution must be made payable to Shareholders registered as at a date subsequent to the date of declaration thereof or the date of confirmation thereof, whichever is the later date.
70 APPENDIX 5
HISTORY OF CONTROL
First change in control As announced on SENS on 22 February 2012, and following the revised announcement on 12 March 2012, a series of Yellow Star (defined in Appendix 3) share transactions between concert parties (of which Yellow Star was party) resulted in a change of control in Stellar Capital (“First Change in Control”), which in turn triggered an obligation by the concert parties to extend a mandatory offer at 26 cents per share to the remaining shareholders in accordance with the requirements of section 123 of the Companies Act (the “First Mandatory Offer”). Stellar Capital did not have any controlling shareholders prior to the First Change in Control. A circular regarding the First Mandatory Offer was posted to shareholders on 19 March 2012, which was followed by an updated offer posted on 3 May 2012. The Company issued its response circular on 19 April 2012. The First Mandatory Offer closed on 11 May 2012 and the results thereof were published on SENS by the concert parties and the Company on 14 May 2012 and 15 May 2012, respectively, as required in terms of Regulation 84(5) of the Companies Act. In addition to Yellow Star and ASOF, the concert parties referred to above were Trinity Asset Management, Titan Nominees and Titantrade (all defined in Appendix 3 above) as well as Sheerprops 156 Proprietary Limited (registration number 1997/019886/07), a private company incorporated in accordance with the laws of South Africa, with J Bishop as the sole director and Oxio Limited as the sole shareholder. Second change in control Following the First Change in Control, which resulted in the Offeror (as defined in the circular dated 19 March 2012), becoming a controlling shareholder of Stellar Capital with an aggregate interest of 48.93%, it was announced on SENS on 23 November 2012 that the Company had entered into the Yellow Star Sale of Shares Agreement for the purchase of all of the ordinary shares in the issued ordinary share capital of Sizwe owned by Yellow Star, constituting 25% of the issued ordinary share capital of Sizwe for an aggregate purchase price of R45 million (the “Sizwe Purchase Price”). The Sizwe Purchase Price was settled as set out in paragraph 3.10 of the circular dated 20 September 2013. The Sizwe Acquisition contained warranties usual for such a transaction. The issue of 100 000 000 shares as a result of the Sizwe Acquisition resulted in Yellow Star triggering an affected transaction and change in control. In terms of section 123 of the Companies Act, Yellow Star was obliged to make a mandatory offer to the remaining shareholders at 32 cents (the “Second Mandatory Offer”). The majority of independent shareholders waived their entitlement to receive the Second Mandatory Offer at a shareholders meeting held on 12 March 2012. Accordingly, the Take Over Regulation Panel (as defined in the Companies Act) granted an exemption to Yellow Star from the obligation to make the Second Mandatory Offer in accordance with Regulation 86(4) of the Companies Regulations, as announced on SENS on 11 April 2013 and 16 May 2013, respectively. Neither the Company nor any of its subsidiaries have had a change in trading objectives during the previous five years.
71 APPENDIX 6
CORPORATE GOVERNANCE
PART A: COMMITMENT The Company and its subsidiaries endorses the principles contained in the King III report on corporate governance and confirms its commitment to the principles of fairness, accountability, responsibility and transparency as advocated therein. The Board strives to ensure that the Group is being ethically managed according to prudently determined risk parameters and in compliance with generally accepted corporate practices and conduct. Introduction The Group remains committed to the goals of sustainable development as it transitions from operating entity to investment holding company. Stellar Capital endorses the principles contained in the King III Report on Corporate Governance and confirms its commitment to the principles of fairness, accountability, responsibility and transparency as advocated therein. The Board strives to ensure that the Group is being ethically managed according to prudently determined risk parameters and in compliance with generally accepted corporate practices and conduct. Board of directors The Board is based on a unitary structure and exercises full and effective control over the Group. It comprises eight members, being six independent non-executive directors and two executive directors. The Board is: - guided by the letter and spirit of the values expressed in King III and the JSE Listings Requirements; - responsible for actively reviewing and enhancing the Group’s system of control and governance on a continuous basis to ensure that the Group is managed ethically and within prudently determined risk parameters; - committed to the maintenance of independence when deciding on matters relating to strategy, performance, resources and standards of conduct; - committed to sustainable value creation for all identified stakeholders; and - responsible for the integrity of the integrated reporting and for overseeing all sustainability issues. The directors as at the Last Practicable Date are those listed in paragraph 12 of the Circular. The Board comprises a majority of non-executive directors who bring specific investment skills and experience to the Board. The composition of the Board is reviewed on a regular basis to ensure ongoing compliance with the requirements of the Companies Act, JSE Listings Requirements and King III. In terms of the memorandum of incorporation one-third of the directors rotate at the annual general meeting. Lerato Mangope and Charles Pettit will rotate and, being eligible, offer themselves for re-election. The Board is responsible for monitoring and reporting on the effectiveness of the Group’s systems of internal control. It is assisted by the audit and risk committee in the discharge of this responsibility. The non-executive directors derive no benefit other than their fees and emoluments as proposed by the Board through the remuneration and nomination committees and approved by shareholders at the Group’s annual general meeting. Peter van Zyl was appointed as a non-executive director on 21 November 2013 and was thereafter appointed as the acting Chief Executive Officer with effect from 1 January 2014. As part of the restructuring of the Group, Hanno van Dyk (executive director), Danie Bisschoff (Chief financial Officer and acting Chief Executive Director) and Nkomsentu Nika (independent non-executive director) resigned as directors of the Company effective 12 December 2013, 31 December 2013 and 3 July 2014 respectively. Janine de Bruyn was appointed as an independent non-executive director on 25 July 2014, followed by the appointment of Christina Wiese and Clare Wiese as independent non-executive directors on 8 September 2014. Charl de Villiers was appointed as the Chief Financial Officer, with effect from 1 February 2015.
72 The chairman The chairman’s role is to set the ethical tone for the Board and to ensure that the Board remains efficient, focussed and operates as a cohesive unit. Dumisani Tabata is the independent non-executive chairman of the Company and his role is separate from that of the Chief Executive Officer. Mr. Tabata provides overall leadership to the Board without limiting the principle of collective responsibility for Board decisions. He is also the chairman of the social & ethics committee, and the nomination committee. As chairman of the Board, he is also responsible for the annual appraisal of the Chief Executive Officer’s performance and oversees the Board’s formal succession plan. Although the Board evaluates the performance and independence of the chairman annually, the role of the chairman is not re-elected annually, but rather as and when required. The Chief Executive Officer The Chief Executive Officer reports to the Board and is responsible for the day-to-day business of the Group and implementation of policies and strategies approved by the Board. Board authority conferred on management is delegated through the Chief Executive Officer, against approved authority levels. Danie Bisschoff resigned as Financial Director and acting Chief Executive Officer of the Company effective 31 December 2013 and Peter van Zyl was appointed as the interim Chief Financial Officer and acting Chief Executive Officer with effect from 1 January 2014. Peter van Zyl and Charl de Villiers have subsequently been appointed as permanent Chief Executive Officer and Chief Financial Officer respectively with effect from 01 February 2015. Non-executive directors All members of the Board have a fiduciary responsibility to represent the best interest of the Group and all of its stakeholders. The Group’s independent non-executive directors are experienced individuals of high calibre and credibility who make a significant contribution to the Board’s deliberations and decisions. They have the necessary skill and experience to exercise judgment on matters concerning the Group’s strategy. Company Secretary Business Address: Empire Park, 55 Empire Service Road, Parktown (Po Box 213, Mulbarton, 2059) Appointed: 11 May 2015 Professional Qualifications: The Board has satisfied itself that Ms du Preez is suitably qualified and experienced to competently fulfil her role as Company Secretary. Term of office: No fixed term but subject to the provisions of the Memorandum of Incorporation and the Companies Act Caroline du Preez was appointed Company Secretary with effect from 11 May 2015 following the resignation of Warwick van Breda on the same date. The Company Secretary plays a vital role in the corporate governance of the Group and is responsible for ensuring Board compliance with procedures and regulations of a statutory nature, and as such, maintains an arm’s length relationship with the Board. Ms. Du Preez ensures compliance with the JSE listings requirements and is responsible for the submission of the annual compliance certificate to the JSE Limited. The Company Secretary ensures that, in accordance with the pertinent laws and regulatory framework, the proceedings and affairs of the Board and its members, the Company itself and, where appropriate the owners of securities in the Company, are properly administered. Mrs. du Preez is the secretary of all of the Board committees. The Board is satisfied with Mrs. du Preez’s professional experience, performance and technical skills in fulfilling her role as Company Secretary. Board processes The directors have access to the advice and services of the company secretary. They are entitled, at the Company’s expense, to seek independent professional advice about the affairs of the Company regarding the execution of their duties as directors.
73 A Board charter is in place and outlines the responsibilities of the Board as follows: • act as the focal point for, and custodian of, corporate governance by managing its relationship with management, the shareholders and other stakeholders of the Company along sound corporate governance principles; • retain full and effective control of the Company; • give strategic direction to the Company, both long and short term; • monitor management in implementing plans and strategies as approved by the Board; • create value through social, economic and environmental performance; • appoint and evaluate the performance of the Chief Executive Officer; • ensure that succession is planned; • identify and regularly monitor key risk areas and key performance indicators of the business; • ensure that the Company complies with relevant laws, regulations and codes of business practice; • ensure that the Company communicates with shareholders and relevant stakeholders openly and promptly; • identify and monitor relevant non-financial matters; • establish a formal and transparent procedure for appointment to the Board, as well as a formal orientation programme for incoming directors; • regularly review processes and procedures to ensure effectiveness of internal systems of control and accept responsibility for the total process of risk management; • assess the performance of the Board, its committees and its individual members on a regular basis; • ensure that the Company is and is seen to be a responsible corporate citizen by having regard to not only the financial aspects of the business of the Company but also the impact that business operations have on the environment and the society within which it operates; • ensure that the Company’s performance includes that of an economic, social and environmental perspective; • ensure that the Company’s ethics are managed effectively; • ensure that the Company has an effective and independent audit committee; • be responsible for information technology (IT) governance; • appreciate that stakeholder’s perceptions affect the Company’s reputation; • ensure the integrity of the Company’s integrated report; • monitor the Company’s compliance with the above; • act in the best interests of the Company by ensuring that individual directors: - adhere to legal standards of conduct; - exercise the degree of care, skill and diligence that would be exercised by a reasonably individual; - act in good faith and in the manner that the director believes is in best interests of the Company; - take independent advice in connection with their duties following an agreed procedure; - disclose real or perceived conflicts to the Board and deal with them accordingly; - deal in securities only in accordance with the policy adopted by the Board; and - commence business rescue proceedings as soon as the Company is financially distressed. The charter also addresses issues such as the composition and size of the Board, Board and committee assessments, Board procedures, matters reserved for Board decision and the frequency and proceedings of Board meetings. Financial Year end On [DATE], the Board resolved to amend the financial year end of the Company from 31 August to the 30 November.
74 Interest in contracts Directors are required to inform the Board timeously of conflicts or potential conflicts of interest they may have in relation to particular items of business. Directors are obliged to excuse themselves from discussions or decisions on matters in which they have a conflict of interest. The procedures around conflict of interests are included in the Board charter and a declaration and conflict of interest policy has been adopted. Directors’ dealings in shares Directors of the Company and its major subsidiaries may not deal in the Company’s shares without first advising and obtaining clearance from the chairman and/or Chief Executive Officer. The Chief Executive Officer and Chief Financial Officer may not deal in the Company’s shares without first advising and obtaining clearance from the Chairman. No director or executive may trade in Stellar Capital shares during closed periods as defined in the JSE Listings Requirements. The directors of the Company keep the Company Secretary advised of all their dealings in securities and details of such dealings are placed on SENS in accordance with the JSE Listings Requirements. Board meeting attendance The following Board meetings were held during the reporting period:
Director 21 Nov 2013 6 Feb 2014 24 Jul 2014 8 Sept 2014 7 May 2015 Lerato Mangope x a a a a Nkosemntu Nika∆ a x n/a n/a n/a Charles Pettit a a a a a Dumisani Tabata a a a x a Peter van Zyl∂ a a a a a Janine de Bruyn∞ n/a n/a n/a a a Christina Wiese^ n/a n/a n/a n/a a Clare Wiese^ n/a n/a n/a n/a a Charl de Villiers# n/a n/a n/a n/a a
∆ Resigned as independent non-executive director on 3 July 2014 ∂ Appointed on 21 November 2013 ∞ Appointed as independent non-executive director on 25 July 2014 ^ Appointed as independent non-executive director on 8 September 2014 # Appointed as an executive director with effect 1 February 2015 Board committees While the Board remains accountable and responsible for the performance and affairs of the Company, it delegates to management and Board committees certain functions to assist it in properly discharging its duties. The chairman of each Board committee reports at each scheduled meeting of the Board and minutes of Board committee meetings are provided to the Board. Each Board committee functions in accordance with the provisions of the committee terms of reference as approved by the Board. Both the directors and the members of the Board committees are supplied with full and timely information that enables them to properly discharge their responsibilities. All directors have unrestricted access to all Group information. The chairman of each Board committee is required to attend annual general meetings to answer questions raised by shareholders. The established Board committees are:
75 Audit and risk committee The current members of the audit and risk committee are Janine de Bruyn (Chairperson), Christina Wiese and Clare Wiese. The committee therefore consists of three independent non-executive directors, in accordance with the JSE Listings Requirements. Remuneration committee The remuneration committee comprises of four independent non-executive directors, Charles Pettit (Chairman), Dumisani Tabata, Janine de Bruyn and Christina Wiese. Nomination committee The committee comprises of three independent non-executive directors, Dumisani Tabata (Chairman), Charles Pettit and Clare Wiese. Nkomsemtu Nika stepped down as the nomination committee Chairman on 3 July 2014. Clare Wiese was appointed to the nomination committee on 8 September. The committee is primarily responsible for assisting the Board in carrying out the following duties: - the regular review of the composition of the Board; - the nomination of potential candidates for appointment to the Board as and when deemed necessary; and - succession planning. Social and ethics committee The Board established the social and ethics committee in line with the requirements of the Companies Act. The members of the committee comprise Janine de Bruyn (independent non-executive director), Lerato Mangope (independent non-executive director) and Dumisani Tabata (independent non-executive director), who serves as Chairman of the committee. Non-financial matters Stellar Capital subscribes to the highest ethical standards and behaviour in the conduct of its business and related activities, and requires total honesty and integrity from its directors and employees. Stellar Capital expects its shareholders and partners to subscribe to the same high ethical standards. Communications with stakeholders The Group is committed to ongoing and effective communication with stakeholders. It subscribes to a policy of open and timeous communication. Employment, development and employment equity Following the disposal of the Group’s remaining operating subsidiaries and conversion to an investment entity, the Group and its subsidiaries no longer employ any permanent employees, save for the Chief Executive Officer and Chief Financial Officer. Sustainability reporting The Group is committed to high moral, ethical and legal standards and expects all representatives of the Group to act in accordance with the highest standards of personal and professional integrity in all aspects of their activities and to comply with all applicable laws, regulations and the Group’s policies. The board believes that the Group has adhered to the ethical standards during the period under review. PART B - APPLICATION OF PRINCIPLES IN THE KING III CODE Preamble Stellar Capital accepts the obligation to apply the practices prescribed by the King III Code and has resolved as a business philosophy to adopt and pursue the same. It therefore strives to meet those objectives in accordance with the content of the table below. 1 – Not applied / will not be applied 2 – In process / partially applied 3 – Full application
76 Stage of Principle Maturity Comments 1. Ethical leadership and corporate citizenship 1.1 The Board should provide effective 3 The Board observes the highest standards of leadership based on an ethical ethical conduct in discharging its responsibilities. foundation The Board has established a social and ethics committee. 1.2 The Board should ensure that the 3 The Board acknowledges the importance of the Company is, and is seen to be, a Company being seen as a responsible citizen. responsible corporate citizen The Board has established a social and ethics committee. 1.3 The Board should ensure that the 3 The Board, together with executive management, Company’s ethics are managed observes the highest standards of ethical conduct effectively in discharging its responsibilities. The Board has established a social and ethics committee. 2. Board and Directors 2.1 The Board should act as the 3 The Board is committed to and endorses the focal point for and custodian of application of the principles of transparency, corporate governance integrity and accountability as recommended in the King III code. 2.2 The Board should appreciate that 3 The Board has established committees, as strategy, risk, performance and recommended by the King III code, in ensuring that sustainability are inseparable strategy, risk, performance and sustainability are integrated. 2.3 The Board should provide effective 3 The Board observes the highest standards of leadership based on an ethical ethical conduct in discharging its responsibilities. foundation The Board has established a social and ethics committee. 2.4 The Board should ensure that the 3 The Board acknowledges the importance of the Company is and is seen to be a Company being seen as a responsible citizen. responsible corporate citizen The Board has established a social and ethics committee. 2.5 The Board should ensure that the 3 The Board, together with executive management, Company’s ethics are managed observes the highest standards of ethical conduct effectively in discharging its responsibilities. The Board has established a social and ethics committee. 2.6 The Board should ensure that 2 The committee consist of three non-executive the Company has an effective directors. In terms of the JSE Listings Requirements and independent audit and risk the committee must comprised of at least three committee independent non-executive directors. 2.7 The Board should be responsible 3 The audit and risk committee is specifically for the governance of risk mandated by the Board to address this matter, and reports to the Board on this matter. 2.8 The Board should be responsible 2 The IT Governance and responsibility has been for information technology (IT) delegated to the audit and risk committee.The governance Company has not yet established an IT governance framework given the size and nature of the IT environment of the Group and no significant IT investments or expenses have been incurred to date.
77 2.9 The Board should ensure that the 3 The audit and risk committee is mandated to Company complies with applicable ensure that the Company complies with applicable laws and considers adherence laws and considers adherence to non-binding rules, to non-binding rules, codes and codes and standards, as assisted and advised by standards the Company secretary and external advisers to the extent required. 2.10 The Board should ensure that there 1 The executive directors conduct an annual review is an effective risk-based internal of the Company’s internal controls, and report audit their findings to the audit and risk committee. This review covers financial, operational and compliance controls, as well as a review of the risk management policies and procedures of the Company. As a consequence of the restructuring conducted within the Group during the reporting period and subsequent conversion from operating entity to investment holding company with limited executive staff as well as the appointment of a dedicated investment manager to the Group, the Board has not considered it appropriate to establish an internal audit function. The Board monitors performance and internal controls employed by the dedicated investment manager on the basis of the management agreement entered into between the Company and the manager. 2.11 The Board should appreciate that 3 The Board has procedures in place to ensure stakeholders’ perceptions affect that all material matters are communicated to the Company’s reputation its stakeholders in an effective and responsible manner. Executive management is tasked to implement this policy in conjunction with Board- appointed advisers. 2.12 The Board should ensure the 3 Stellar Capital has formulated and implemented integrity of the Company’s processes to ensure the integrity of the Company’s integrated report integrated report, the contents whereof will be consistent with the size and nature of Stellar Capital’s business. 2.13 The Board should report on the 3 The directors recognise that they are responsible effectiveness of the Company’s for the Group’s system of financial and internal system of internal controls controls. The executive directors are responsible for identifying, analysing, reporting and managing Group risk which forms part of their daily functions. The Terms of Reference of the Audit and risk committee includes the need to report to the Board annually on the effectiveness of the Company’s internal financial controls. 2.14 The Board and its directors should 3 Directors are required to declare their interest at act in the best interests of the every Board meeting. Company 2.15 The Board should consider 3 In the event that business rescue proceedings are business rescue proceedings or contemplated, same will be implemented within the other turnaround mechanisms as framework of the Companies Act. soon as the Company is financially distressed as defined in the Act.
78 2.16 The Board should elect a chairman 3 The roles of the CEO and Chairman are fulfilled by of the Board who is an independent separate individuals. non-executive director. The CEO of the Company should not also fulfill the role of chairman of the Board 2.17 The Board should appoint the chief 3 With effect from 1 February 2015, the Company executive officer and establish a has appointed its Peter van Zyl (previously the framework for the delegation of Chief Financial Officer) as the permanent Chief authority Executive Officer. Daily operations of the Group are managed by the executive directors. The Company, following its conversion to an investment entity, has also appointed a dedicated investment manager which manages key operational and strategic functions in terms of an agreed authority matrix. 2.18 The Board should comprise a 3 The Board comprises a majority of non-executive balance of power, with a majority directors, all of which are independent. In terms of non-executive directors. The of King III the majority of non-executive directors majority of non-executive directors should be independent. Prior to the restructuring should be independent. of the Group and changes in the composition of major shareholders, the chairman was considered to be non-independent. The Company was granted dispensation from the JSE to appoint the third independent director on or before 31 December 2013. Subsequent to the restructuring of the Group and change in the composition of major shareholders, the chairman’s status as being non- independent has been reconsidered and the Board is satisfied that he is now independent. 2.19 Directors should be appointed 3 The appointment of directors is a matter considered through a formal process by the Board as a whole, as assisted by the remuneration and nomination committees. A formal Appointments to the Board Policy has been adopted by the Board. 2.20 The induction of and ongoing 2 New directors will have unlimited access to the training and development of Company’s resources in order to familiarise directors should be conducted themselves with all matters related to the Company. through formal processes They are also provided with induction packs. Formal training is provided on an ad hoc basis. 2.21 The Board should be assisted by 3 The Board annually reviews the competence and a competent, suitably qualified and suitability of the Company secretary and is satisfied experienced Company secretary as to his qualifications and experience. 2.22 The evaluation of the Board, its 1 Due to the number of Board changes during the committees and the individual period of Group restructuring, no formal evaluation directors should be performed of the Board has taken place. The Group will every year endeavour to institute annual evaluations during the forthcoming reporting period. 2.23 The Board should delegate 3 The Board has established committees, which certain functions to well-structured report to the Board. committees without abdicating its own responsibilities 2.24 A governance framework should 3 The audit and risk committee is specifically be agreed between the Group and mandated by the Board to address this matter, and its subsidiary Boards reports to the Board on this matter.
79 2.25 Companies should remunerate 3 The remuneration committee is mandated to directors and executives fairly and establish and assess the remuneration policy of responsibly the Group. 2.26 Companies should disclose the 3 The remuneration of the Company’s directors is remuneration of each individual disclosed in its Annual Financial Statements, as director and certain senior required. executives 2.27 Shareholders should approve the 3 The remuneration of the Company’s directors Company’s remuneration policy is subject to approval by shareholders at the Company’s annual general meetings. 3. Audit and risk committees 3.1 The Board should ensure that 3 The committee consists of three independent non- the Company has an effective executive directors in accordance with the JSE and independent audit and risk Listings Requirements and requirements of King III. committee (private Company exception) 3.2 Audit and risk committee members 3 The members of the audit and risk committee, should be suitably skilled and which is constituted by non-executive directors, all experienced independent, non- have sufficient financial backgrounds and extensive executive directors (subsidiary business management and investment experience. exception) 3.3 The audit and risk committee should 3 The audit and risk committee is chaired by an be chaired by an independent non- independent non-executive director. executive director 3.4 The audit and risk committee 3 Processes in this regard are in place for the should oversee the integrated compilation of an integrated report, the contents reporting (integrated reporting, whereof are appropriate for the size and nature financial, sustainability and of Stellar Capital’s business, and forms part of the summarised information) audit and risk committee’s mandate. The audit and risk committee should be responsible for evaluating the significant judgments and reporting decisions affecting the integrated report. The audit and risk committee’s review of the financial reports should encompass the annual financial statements, interim reports, preliminary or provisional result announcements, summarised integrated information, any other intended release of price- sensitive financial information, trading statements, circulars and similar documents. 3.5 The audit and risk committee 3 The audit and risk committee is mandated to should ensure that a combined establish a combined assurance model and to assurance model is applied to apply same in providing a coordinated approach to provide a coordinated approach to all assurance activities. all assurance activities 3.6 The audit and risk committee 3 The audit and risk committee evaluates the should satisfy itself of the expertise, performance of the finance function on an annual resources and experience of the basis and makes appropriate recommendations to Company’s finance function the Board in this regard.
80 3.7 The audit and risk committee 1 The audit and risk committee conduct an annual should be responsible for review of the Company’s internal controls, and overseeing of internal audit report their findings to the executive Committee. This review covers financial, operational and compliance controls, as well as a review of the risk management policies and procedures of the Company. As a consequence of the restructuring conducted within the Group during the reporting period and subsequent conversion from operating entity to investment holding company with limited executive staff as well as the appointment of a dedicated investment manager to the Group, the Board has not considered it appropriate to establish an internal audit function. The Board monitors performance and internal controls employed by the dedicated investment manager on the basis of the management agreement entered into between the Company and the manager. 3.8 The audit and risk committee 3 The audit and risk committee is mandated by should be an integral component of the Board to establish policies and procedures in the risk management process respect of the risk management process. 3.9 The audit and risk committee is 3 The audit and risk committee considers the responsible for recommending the appointment of the external auditor on an annual appointment of the external auditor basis and manages the relationship throughout the and overseeing the external audit financial year. process 3.10 The audit and risk committee 3 The audit and risk committee’s report to the Board should report to the Board and and shareholders is included in the integrated shareholders on how it has report. discharged its duties 4. The governance of risk 4.1 The Board should be responsible 3 The audit and risk committee is specifically for the governance of risk mandated by the Board to address this matter, and reports to the Board on this matter. 4.2 The Board should determine the 3 The audit and risk committee is specifically levels of risk tolerance mandated by the Board to address this matter, and reports to the Board on this matter. 4.3 The risk committee or audit and 3 The audit and risk committee is specifically risk committee should assist mandated by the Board to address this matter, the Board in carrying out its risk and reports to the Board on this matter. responsibilities 4.4 The Board should delegate to 3 The audit and risk committee is specifically management the responsibility to mandated by the Board to address this matter, design, implement and monitor the and reports to the Board on this matter. risk management plan 4.5 The Board should ensure that risk 3 The audit and risk committee meets and reports assessments are performed on a to the Board on a quarterly basis to ensure its continual basis mandate is carried. 4.6 The Board should ensure that 3 The audit and risk committee is mandated by the frameworks and methodologies Board to establish and implement frameworks are implemented to increase and methodologies to increase the probability of the probability of anticipating anticipating unpredictable risks. unpredictable risks
81 4.7 The Board should ensure that 2 The audit and risk committee is mandated to management considers and establish risk management policies and procedures, implements appropriate risk which is in turn implemented by executive responses management in responding to various risks. A formal risk management policy was not adopted by the Board during the period under review due to the significant restructuring of the Group. Following the conversion of the company from an operating entity to an investment holding company, the Board has endeavoured to formalize risk management policies and procedures appropriate to the nature of an investment company in the forthcoming financial period. 4.8 The Board should ensure continual 3 The audit and risk committee is mandated to establish risk monitoring by management risk management policies and procedures, which is in turn implemented by executive management in monitoring and responding to various risks. A formal risk management policy was not adopted by the Board during the period under review due to the significant restructuring of the Group. Following the conversion of the company from an operating entity to an investment holding company, the Board has endeavoured to formalize risk management policies and procedures appropriate to the nature of an investment company in the forthcoming financial period. 4.9 The Board should receive 3 The audit and risk committee is mandated assurance regarding the to establish risk management policies and effectiveness of the risk procedures, which is in turn communicated to and management process implemented by executive management. The audit and risk committee reports to the Board in this regard on this matter. 4.10 The Board should ensure that there 3 The audit and risk committee is mandated to are processes in place enabling establish policies and procedures to ensure risk complete, timely, relevant, accurate areas are identified and monitored continuously and accessible risk disclosure to and timeously. The Board in turns ensures stakeholders complete, timely, relevant, accurate and accessible communication to stakeholders in this regard. 5. The governance of Information Technology 5.1 The Board should be responsible 3 As per the Board charter the executive Board is for information technology (IT) responsible that technology and systems used in governance the organization are adequate. The audit and risk committee assists the Board to consider IT as it relates to financial reporting, IT risk management and related controls. 5.2 IT should be aligned with the 3 As per the Board charter the executive Board performance and sustainability is responsible that information technology and objectives of the Company systems used in the organization are adequate to run the business properly for it to compete through the efficient use of its assets, processes and resources.
82 5.3 The Board should delegate to 3 The audit and risk committee assists the Board to management the responsibility consider IT as it relates to financial reporting, IT risk for the implementation of an IT management, related controls and IT Governance. governance framework It should specifically oversee IT risk and controls, business continuity and data recovery and IT security. 5.4 The Board should monitor and 3 The audit and risk committee is mandated to evaluate significant IT investments establish policies and procedures to ensure and expenditure significant IT investments and expenditure are monitored and evaluated on a continuous basis. There were no significant investments in IT during the period under review. 5.5 IT should form an integral part of 3 The audit and risk committee assists the Board in the Company’s risk management reviewing its IT responsibilities and does form an integral part of the Company’s risk management, albeit that the Group’s IT function has significantly reduced in size and complexity following the conversion from an operating entity to an investment holding company. The audit and risk committee will continue to monitor the IT function in a manner appropriate to the size and nature of Stellar Capital’s operations. 5.6 The Board should ensure that 3 The audit and risk committee is mandated to information assets are managed establish policies and procedures to ensure effectively significant IT investments and expenditure are monitored and evaluated on a continuous basis. There were no significant investments in IT during the period under review. 5.7 A risk committee and audit and risk 3 As stipulated in its terms of reference the audit and committee should assist the Board risk committee assists the Board in reviewing its IT in carrying out its IT responsibilities. responsibilities. 6. Compliance with laws, codes, rules and standards 6.1 The Board should ensure that the 3 The Company secretary advises the Board on Company complies with applicable all laws, rules, codes and standards applicable laws and considers adherence to the Company. The directors are well-versed in to nonbinding rules, codes and this regard, and where required, appoint external standards. advisers to assist on specific matters. 6.2 The Board and each individual 3 The Company secretary advises the Board on director should have a working all laws, rules, codes and standards applicable understanding of the effect of the to the Company. The directors are well-versed in applicable laws, rules, codes and this regard, and where required, appoint external standards on the Company and its advisers to assist on specific matters. business 6.3 Compliance risk should form an 3 The audit and risk committee is mandated to integral part of the Company’s risk identify areas of compliance risk, in conjunction management process with the Company secretary, and to establish policies and procedures to mitigate same. 6.4 The Board should delegate to 3 The audit and risk committee is mandated to management the implementation of establish an effective compliance framework and an effective compliance framework related processes, which are then implemented by and processes executive management throughout the Group.
83 7. Internal Audit 7.1 The Board should ensure that there 1 The audit and risk committee conducts an annual is an effective risk-based internal review of the Company’s internal controls, and audit report their findings to the executive Board. This review covers financial, operational and compliance controls, as well as a review of the risk management policies and procedures of the Company. As a consequence of the restructuring conducted within the Group during the reporting period and subsequent conversion from operating entity to investment holding company with limited executive staff as well as the appointment of a dedicated investment manager to the Group, the Board has not considered it appropriate to establish an internal audit function. The Board monitors performance and internal controls employed by the dedicated investment manager on the basis of the management agreement entered into between the Company and the manager. 7.2 Internal audit should follow a risk- 1 As per the terms of reference of the audit and risk based approach to its plan committee it should satisfy itself that the internal audit coverage plans and approach are informed by and addresses the strategy and risks of the Company. As a consequence of the restructuring conducted within the Group during the reporting period and subsequent conversion from operating entity to investment holding company with limited executive staff as well as the appointment of a dedicated investment manager to the Group, the Board has not considered it appropriate to establish an internal audit function. The Board monitors performance and internal controls employed by the dedicated investment manager on the basis of the management agreement entered into between the Company and the manager. 7.3 Internal audit should provide 1 As a consequence of the restructuring conducted a written assessment of the within the Group during the reporting period and effectiveness of the Company’s subsequent conversion from operating entity to system of internal control and risk investment holding company with limited executive management. staff as well as the appointment of a dedicated investment manager to the Group, the Board has not considered it appropriate to establish an internal audit function. The Board monitors performance and internal controls employed by the dedicated investment manager on the basis of the management agreement entered into between the Company and the manager. 7.4 The audit and risk committee 3 As per the terms of reference of the audit and risk should be responsible for committee it is responsible for assessing the work overseeing internal audit performed by the internal audit function.
84 7.5 Internal audit should be 1 As a consequence of the restructuring conducted strategically positioned to achieve within the Group during the last reporting period its objectives and subsequent conversion from operating entity to investment holding company with limited executive staff as well as the appointment of a dedicated investment manager to the Group, the Board has not considered it appropriate to establish an internal audit function. The Board monitors performance and internal controls employed by the dedicated investment manager on the basis of the management agreement entered into between the Company and the manager. 8. Governing stakeholder relationships 8.1 The Board should appreciate that 3 The Board is ultimately responsible for determining stakeholders’ perceptions affect a the Company’s interactions with its stakeholders Company’s reputation and for overseeing the development of a formal stakeholder engagement plan. The Board has procedures in place to ensure that all material matters are communicated to its stakeholders in an effective and responsible manner. Executive management is tasked to implement this policy in conjunction with Board-appointed advisers. 8.2 The Board should delegate to 3 The Board is ultimately responsible for determining management to proactively deal the Company’s interactions with its stakeholders with stakeholder relationships and for overseeing the development of a formal stakeholder engagement plan. The Board has procedures in place to ensure that all material matters are communicated to its stakeholders in an effective and responsible manner. Executive management is tasked to implement this policy in conjunction with Board-appointed advisers. 8.3 The Board should strive to 3 The Board has procedures in place to ensure achieve the appropriate balance that all material matters are communicated to between its various stakeholder its stakeholders in an effective and responsible groupings, in the best interests of manner. In doing so, the Company is able to the Company achieve an appropriate balance between its various stakeholders and the Company’s best interest. 8.4 Companies should ensure the 3 The Board has procedures in place to ensure equitable treatment of shareholders that all material matters are communicated to (only applicable to companies and its stakeholders in an effective and responsible state owned companies) manner. All shareholders, minorities included, are treated equitably. 8.5 Transparent and effective 3 The Board is ultimately responsible for determining communication with stakeholders the Company’s interactions with its stakeholders is essential for building and and for overseeing the development of a formal maintaining their trust and stakeholder engagement plan. The Board has confidence procedures in place to ensure that all material matters are communicated to its stakeholders in an effective and responsible manner. Executive management is tasked to implement this policy in conjunction with Board-appointed advisers.
85 8.6 The Board should ensure that 2 Resolution of disputes is not always achieved disputes are resolved as effectively, effectively or timeously and the Company is efficiently and expeditiously as seeking to improve in this area. possible 9. Integrated Reporting and disclosure 9.1 The Board should ensure the 3 The Company’s annual report, which consists of integrity of the Company’s an integrated report, is reviewed by the Board to integrated report. ensure integrity thereof prior to its approval. 9.2 Sustainability reporting and 1 Stellar Capital will not produce a separate disclosure should be integrated sustainability report for the time being. with the Company’s financial reporting 9.3 Sustainability reporting and 1 An assurance statement on ethics and disclosure should be independently sustainability reporting has not been obtained assured as yet. Consideration is currently being given as to how this recommended practice can best be implemented.
86 APPENDIX 7
OTHER DIRECTORSHIPS HELD BY STELLAR CAPITAL DIRECTORS
Insofar as is known to Stellar Capital, the following directorships were held by the directors of Stellar Capital during the previous five years:
Director Directorship in the preceding five years Status Janine de Bruyn Stellar Advisers Director - active African Pioneer Group Resigned Afripalm Brands Resigned Afripalm Horizons Resigned Stellar Capital Partners Limited Director - active Dream World Investments 506 Director - active Friedshelf 1678 (Pty) Ltd Director - active Kingsley Technologies Resigned Kutana Resources Director – active Malesela Investments No. 1 Resigned Malesela Investments No. 3 Resigned Malesela Investments No. 4 Resigned Malesela Investments No. 6 Resigned Micawber 469 Resigned North Oaks No. 10 Director - active Nozala Investments Resigned Pamodzi Spice 1 Resigned Prowess Investment Managers Director - active Salt Capital Director - active Sarhwu Investment Holdings Resigned Sekunjalo Private Equity Resigned Ticapax Director - active Trans African Concessions Resigned Unipalm Investment Holdings Resigned West Coast Capital Resigned Lerato Mangope Alumni Trading 225 Resigned Alumni Trading 252 Director – active Stellar Capital Partners Limited Director – active Coral Lagoon Basadi Investment Holdings Director – active Lionshare Properties Director – active Mollo Holdings Director – active Rikhweru Trading Director – active Rowan Tree 61 Director – active Sizwe Africa IT Group Resigned UBank Director – active Charles Edward Pettit Stellar Capital Director - active Stellar Investment Holdings Director - active Torre Director - active Torre South Africa Holdings (Pty) Ltd Director – active Torre Holdings (Pty) Ltd Director - active Control Instruments Group Ltd Torre Automotive (Pty) Ltd Control Instruments Automotive Plastics (Pty) Ltd Director – active Transport Lighting and Fleet Products (Pty) Ltd Director - active Manhand SA (Pty) Ltd Director - active Manhand Materials Handling Holdings (Pty) Ltd Director - active Kanu Equipment Proprietary Limited Director - active Torre Capital Proprietary Limited Director - active Tractor and Grader Appointment Supplies Copperbelt Ltd (Zambia) in process Afrasia Capital Management Ltd Resigned Afrasia Corporate Finance (Africa) Ltd Resigned
87 Director Directorship in the preceding five years Status Stellar Advisers (previously ACF) Resigned Afrasia Special Opportunities Fund (Pty) Ltd Resigned Afrasia Special Opportunities Fund Ltd Resigned Dale Capital Holdings SA (Pty) Ltd Resigned Dale Capital Private Equity (Pty) Ltd Resigned Dale Risk Management Services (Pty) Ltd Resigned Goliath Gold Mining Ltd Resigned Imagination Advisory and Distribution Services (Pty) Ltd Resigned Lavender Sky Investments 40 (Pty) Ltd Resigned Mine Restoration Investments Ltd Resigned Rapid Fire Investments Ltd Resigned Sekunjalo Asset Finance (Pty) Ltd Resigned Sekunjalo Asset Management (Pty) Ltd Resigned Sekunjalo Life Assurance Ltd Resigned Sekunjalo Medical Aid Administrators (Pty) Ltd Resigned Sekunjalo Private Equity (Pty) Ltd Resigned Sharenet (Pty) Ltd Resigned Sharenet CFD’s (Pty) Ltd Resigned Sharenet Financial Solutions (Pty) Ltd Resigned Sharenet Views (Pty) Ltd Resigned Sheerprops 156 (Pty) Ltd Resigned Silvertree Properties (Pty) Ltd Resigned Thunder Capital (Pty) Ltd Resigned Thunder Properties (Pty) Ltd Resigned Thunder Securitisation (Pty) Ltd Resigned Trinity Asset Management (Pty) Ltd Resigned West Coast Capital (Pty) Ltd Resigned Workers Life Assurance Company (Pty) Ltd Resigned Workers Life Medical Aid Administrators (Pty) Ltd Resigned Yellow Star Group Holdings (Pty) Ltd Resigned Dumisani Dumekhaya- 8 Mile Investments 207 Resigned Tabata Afrifresh Group Resigned Afriglass Director – active Amatola Green Power Resigned Andrews Kit Director – active Bowes Loon and Connellan Resigned Brooklyn Automotive Director – active Brooklyn V3 Investments Director – active Buildmax Aggregates Resigned Buildmax Equipment and Services Director – active Burcron Trade 61 Resigned Capraway Director – active Catwalk Investments 300 Director – active Chrystalpine Investments 9 Director – active Stellar Capital Partners Limited Director – active Cresta Motor Lab Director – active Delve In Capital Director – active East Rand Motor Lab Director – active HK Automotive Spares Director – active Honey Silk Trading and Investments 1031 Director – active Komver Investments Director – active Labonte 24 Director – active Lamacs Solutions Resigned Matlosana Medical Health Services Director – active Micawber 809 Director – active
88 Director Directorship in the preceding five years Status Mulcris Aviation Resigned Nciba Solutions Resigned New Heights 368 Director – active Platinum Budget Office Furniture Director – active PMG Motors Amanzimtoti Resigned Putuma Investments Director – active Ramsay Webber Resigned Razor Mechanical Centre Director – active Riverside Motor Lab Director – active Rowan Tree 11 Director – active Royal Anthem Investments 54 Director – active Sizwe Africa IT Group Resigned Smith Tabata Director – active Smith Tabata Buchanan Boyes Director – active Smith Tabata Loon and Connellan Director - active Soilon Investments Director – active South Rand Motor Lab Director – active STBB Smith Tabata Buchanan Boyes Director – active Super 5 Media Resigned Telkom SA Resigned Transaction Capital Director – active Uqilima Investments Director – active Vuwa Capital Director – active Vuwa Fleet Services Director – active Vuwa Investments Director – active Vuwa Investments Director – active Zamindlela Motor Group Resigned Peter John van Zyl Stellar Advisers Resigned Afrasia Special Opportunities Fund Director – active Amrichprop 27 Properties Director – active Consolidated Resources Resigned Control Instruments Group Director – active Emergent Energy Director – active FIOS Resigned First Light Administration Resigned Friedshelf 1678 (Pty) Ltd Director - active Goliath Gold Mining Resigned Imagination Advisory and Distribution Resigned Imagination Capital Management Resigned Imagination Capital Management Resigned Kilomix Investments Resigned LAN Solutions Director – active Octigon (SA) Resigned Preparatory Play and Learning Centre Director – active Saratoga Private Equity Director – active Saratoga Software Director – active Saratoga Software Resigned Sekunjalo Asset Finance Resigned Sekunjalo Asset Management Resigned Sekunjalo Capital Resigned Sekunjalo Corporate Services Resigned Sekunjalo Financial Services Resigned Sekunjalo Financial Services Resigned Sekunjalo Fund Administrators Resigned Sekunjalo Fund Administrators Resigned Sekunjalo Health Care Resigned Sekunjalo Healthcare Resigned Sekunjalo Private Equity Resigned
89 Director Directorship in the preceding five years Status Sekunjalo Private Equity Resigned Sekunjalo Properties Resigned Sekunjalo Properties Resigned Sekunjalo Technology Resigned Silvertree Properties Director – active Stellar Capital Partners Limited Director - active Synbi Resigned TDF Fund Administrators Resigned The Centre for Play and Learning Resigned Thunder Capital Director - active . Thunder Properties Director - active Thunder Securitisations Director – active Torre Holdings Director – active Torre Industries Director – active West Coast Capital Resigned Workers Life Assurance Company Resigned Workers Life Medical Aid Resigned Caroline Clare Wiese Capstone 597 Director – active Incapoint Investments Director – active Metcap 14 Sloane and Madison Director – active Stellar Capital Partners Limited Director - active Wiese Dini Property Development Member – active Christina Helmien Wiese Cool Ideas 225 Director - active Cream Magenta 140 Director – active Incarite Investments Director - active Stellar Capital Partners Limited Director - active Charl Benjamin de Villiers Friedshelf 1678 (Pty) Ltd Director - active Stellar Capital Partners Limited Director - active
90 Stellar Capital Partners Limited (Previously ConvergeNet Holdings Limited) (Incorporated in the Republic of South Africa) (Registration number 1998/015580/06) (“Stellar Capital” or the “Company”) Share code: SCP ISIN: ZAE000198586
NOTICE OF GENERAL MEETING
NOTICE IS HEREBY GIVEN that a General Meeting of shareholders will be held at 10:00 on Wednesday, 21 October 2015 at Level P3, Oxford Corner, cnr Jellicoe and Oxford Roads, Rosebank, Johannesburg. Purpose The purpose of the General Meeting is to consider and, if deemed appropriate, to approve, with or without modification, the resolutions set out in this notice of General Meeting. Note: 1 The definitions and interpretations commencing on page 4 of the circular to which this notice is attached (the “Circular”), apply, mutatis mutandis, to this notice and to the resolutions set out below. 2 For an ordinary resolution to be approved by shareholders, it must be supported by more than 50% of the voting rights exercised on the resolution. 3 For a special resolution to be approved by shareholders, it must be supported by at least 75% of the voting rights exercised on the resolution. 4 Quorum requirement for resolutions to be approved: Sufficient persons being present to exercise, in aggregate, at least 25% of all voting rights that are entitled to be exercised on the respective resolutions. Please note that the Company will not provide for electronic participation at the General Meeting. 1 SPECIAL RESOLUTION NUMBER 1 – Issue of more than 30% of Stellar Capital’s issued share capital “RESOLVED THAT, in accordance with section 41(1) and 41(3) of the Companies Act, the board of directors of the Company be and is hereby authorised to issue, as consideration for the Torre Sale Shares, such number of ordinary Stellar Capital shares to the vendors comprising the Vendor Consortium, if and to the extent that such shares (i) are issued to a person related or inter-related to the Company, or to a director, future director, prescribed officer, and/or (ii) constitute more than 30% of the Company’s issued share capital immediately before the issue of such shares.” Information and explanatory material with respect to Special Resolution Number 1 as contemplated in section 65(4)(b) of the Companies Act: This resolution is required to be approved in accordance with section 65(11)(d) and (e) read together with section 41(3) of the Companies Act in terms of which a special resolution is required to the extent that a company issues shares to a person who is related or inter-related to such company, or to a director, future director, prescribed officer of that company, and/or the shares issued equal or exceed 30% of the total issued shares capital held by shareholders immediately before the transaction is voted on. The Transaction contemplated the Company issuing in excess of 30% of the total shares currently in issue. This resolution requires the approval of 75% of the voting rights of shareholders exercised on the resolution, in accordance with section 65(11)(d) and (e) of the Companies Act.
91 2 ORDINARY RESOLUTION NUMBER 1 – Approval of the Transaction “RESOLVED THAT, subject to special resolution number 1 being approved, the Transaction be and is hereby approved, as defined in and on the terms set out in the Circular which forms part of this notice.” Information and explanatory material with respect to Ordinary Resolution Number 1 In accordance with the Listings Requirements the Company will be regarded as having undertaken a reverse takeover as a result of the Transaction and accordingly requires the general approval of shareholders. This resolution requires the approval of 50% of the voting rights of shareholders exercised on the resolution, in accordance with section 9.20 of the Listings Requirements. Any parties to the Vendor Consortium including any of their associates, to the extent they hold any shares in Stellar Capital to vote at the General Meeting, will be precluded from voting on the resolutions required to implement the Transaction. 3 ORDINARY RESOLUTION NUMBER 2 – Authorising Resolution “RESOLVED THAT, any director or the Company Secretary be and is hereby authorised, instructed and empowered to do all such things, sign all such documents and take all such actions as may be necessary for or incidental to the implementation of Special Resolutions contained herein.” Information and explanatory material with respect to Ordinary Resolution Number 2 as contemplated in section 65(4)(b) of the Companies Act This resolution is necessary to give effect to any of the above resolutions which may be approved by shareholders. This Resolution requires the approval of more than 50% of the voting rights of shareholders exercised on the resolution, in accordance with the Listings Requirements. RECORD DATES The posting record date, being the date that shareholders must have been recorded in the register to be eligible to receive this notice of General Meeting, is Friday, 28 August 2015. The last day to trade in order to be eligible to vote at the General Meeting is Friday, 9 October 2015. The Voting Record Date, being the date that shareholders must be recorded in the register to be eligible to speak and vote at the General Meeting, is Friday, 16 October 2015. VOTING AND PROXIES Section 63(1) of the Companies Act requires that meeting participants provide satisfactory identification. Accordingly, meeting participants will be required to provide proof of identification to the reasonable satisfaction of the chairman of the General Meeting and must accordingly bring a copy of their identity document, passport or drivers’ license to the General Meeting. If in doubt as to whether any document will be regarded as satisfactory proof of identification, meeting participants should contact the Transfer Secretaries for guidance. A shareholder entitled to attend, speak and vote at the General Meeting is entitled to appoint one or more proxies to attend, speak and vote in his stead. A proxy need not be a shareholder of Stellar Capital. For the convenience of certificated shareholders and dematerialised shareholders with “own name” registration, a form of proxy is attached hereto. Completion of a form of proxy will not preclude such shareholder from attending and voting (in preference to that shareholder’s proxy) at the General Meeting.
92 Duly completed forms of proxy and the authority (if any) under which it is signed must reach the Transfer Secretaries at the address given below by not later than 10:00 on Monday, 19 October 2015. Dematerialised shareholders without “own name” registration who wish to attend the General Meeting in person should request their CSDP or stockbroker to provide them with the necessary Letter of Representation in terms of their custody agreement with their CSDP or stockbroker. Dematerialised shareholders without “own name” registration who do not wish to attend but wish to be represented at the General Meeting must advise their CSDP or stockbroker of their voting instructions. Dematerialised shareholders without “own name” registration should contact their CSDP or stockbroker with regard to the cut-off time for their voting instructions. SIGNED at ROSEBANK on behalf of the Board on 2 SEPTEMBER 2015 in terms of powers of attorney granted by the directors. By order of the Board
STELLAR CAPITAL PARTNERS LIMITED PJ van Zyl Chief Executive Officer 4 September 2015
Registered Office Transfer Secretaries Level P3, Oxford Corner Computershare Investor Services Proprietary Limited Cnr Jellicoe and Oxford Roads 70 Marshall Street Rosebank Johannesburg, 2001 Johannesburg, 2196
93 94 Stellar Capital Partners Limited (Previously ConvergeNet Holdings Limited) (Incorporated in the Republic of South Africa) (Registration number 1998/015580/06) (“Stellar Capital” or the “Company”) Share code: SCP ISIN: ZAE000198586
FORM OF PROXY
The definitions and interpretations commencing on page 4 of the Circular to which this form of proxyis attached apply, mutatis mutandis, to this section. For use by certificated shareholders or “own name” dematerialised shareholders at the General Meeting of the Company to be held at Level P3, Oxford Corner, cnr Jellicoe and Oxford Roads, Rosebank, Johannesburg at 10:00 on Wednesday, 21 October 2015. If dematerialised shareholders, other than “own name” dematerialised shareholders, have not been contacted by their CSDP or stockbroker with regard to how they wish to cast their vote, they should contact their CSDP or stockbroker and instruct their CSDP or stockbroker as to how they wish to cast their vote at the General Meeting in order for their CSDP or stockbroker to vote in accordance with such instructions. If dematerialised shareholders, other than “own name” dematerialised shareholders, have not been contacted by their CSDP or stockbroker, it would be advisable for them to contact their CSDP or stockbroker, as the case may be, and furnish them with their instructions. Dematerialised shareholders who are not “own name” dematerialised shareholders and who wish to attend the General Meeting must obtain their necessary Letter of Representation from their CSDP or stockbroker, as the case may be, and submit same to the Transfer Secretaries to be received by no later than 10:00, on Monday, 19 October 2015. This must be done in terms of the agreement entered into between dematerialised shareholders and their CSDP or stockbroker. If the CSDP or stockbroker, as the case may be, does not obtain instructions from such dematerialised shareholders, it will be obliged to act in terms of the mandate furnished to it, or if the mandate is silent in this regard, to abstain from voting. Such dematerialised shareholders, other than “own name” dematerialised shareholders, must not complete this form of proxy and should read note 11 of the overleaf. I/We (please print) ______of (address) ______Telephone number ( ) Cellphone number Email address being the holder/s of ______ordinary shares of no par value in Stellar Capital, appoint (see note 1): 1. or failing him,
2. or failing him,
3.the Chairperson of the General Meeting, as my/our proxy to act for me/us and on my/or behalf at the General Meeting which will be held for the purpose of considering and, if deemed fit, approving, with or without modification, the resolutions to be proposed thereat and/or at any adjournment thereof; and to vote for and/or against the resolutions and/or abstain from voting in respect of the shares registered in my/our name/s, in accordance with the following instructions (see note 2):
95 Number of shares
For Against Abstain
1. Special Resolution Number 1 Issuing of shares in excess of 30%
2. Ordinary Resolution Number 1 Approval of the Transaction
3. Ordinary Resolution Number 2 Authorising Resolution
Signed at on 2015
Signature Assisted by me (where applicable)
Name Capacity Signature
96 NOTES TO THE FORM OF PROXY A shareholder entitled to attend and vote at the General Meeting may appoint one or more persons as his proxy to attend, speak or vote in his stead at the General Meeting. A proxy need not be a shareholder. On a show of hands, every shareholder shall have one vote (irrespective of the number of Stellar Capital shares held). On a poll, every shareholder shall have, for each share held by him, that proportion of the total votes in Stellar Capital which the aggregate amount of the nominal value of that share held by him bears to the aggregate amount of the nominal value of all the shares issued by Stellar Capital. SUMMARY OF RIGHTS CONTAINED IN SECTION 58 OF THE COMPANIES ACT In terms of section 58 of the Companies Act: • a shareholder may, at any time and in accordance with the provisions of section 58 of the Companies Act, appoint any individual (including an individual who is not a shareholder) as a proxy to participate in, and speak and vote at, a general meeting on behalf of such shareholder; • a proxy may delegate his authority to act on behalf of a shareholder to another person, subject to any restriction set out in the instrument appointing such proxy; • irrespective of the form of instrument used to appoint a proxy, the appointment of a proxy is suspended at any time and to the extent that the relevant shareholder chooses to act directly and in person in the exercise of any of such shareholder’s rights as a shareholder; • any appointment by a shareholder of a proxy is revocable, unless the form of instrument used to appoint such proxy states otherwise; • if an appointment of a proxy is revocable, a shareholder may revoke the proxy appointment by: (i) cancelling it in writing, or making a later inconsistent appointment of a proxy; and (ii) delivering a copy of the revocation instrument to the proxy and to the relevant company; and • a proxy appointed by a shareholder is entitled to exercise, or abstain from exercising, any voting right of such shareholder without direction, except to the extent that the Memorandum of Incorporation, or the instrument appointing the proxy, provides otherwise. Notes: 1. A shareholder may insert the name of a proxy or the names of two alternative proxies of his choice in the spaces provided with or without deleting “the chairperson of the General Meeting”, but any such deletion must be initialled by the shareholder. The person whose name appears first on the form of proxy and who is present at the General Meeting will be entitled to act as proxy to the exclusion of those whose names follow. 2. Please insert the number of shares in the relevant spaces according to how you wish your votes to be cast. If you wish to cast your votes in respect of a lesser number of Stellar Capital shares exercisable by you, insert the number of Stellar Capital shares held in respect of which you wish to vote. Failure to comply with the above will be deemed to authorise and compel the chairperson, if the chairperson is an authorised proxy, to vote in favour of the resolutions, or to authorise any other proxy to vote for or against the resolutions or abstain from voting as he deems fit, in respect of all the shareholder’s votes exercisable thereat. A shareholder or its/his proxy is not obliged to use all the votes exercisable by the shareholder or its/his proxy, but the total of the votes cast and in respect whereof abstention is recorded may not exceed the total of the votes exercisable by the shareholder or its/his proxy. 3. Forms of proxy must be lodged with the Transfer Secretaries, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), to be received by no later than 10:00 on Monday, 19 October 2015, in order to be effective. 4. Any alteration or correction made to this form of proxy must be initialled by the signatory/(ies). 5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the Transfer Secretaries or waived by the chairperson of the General Meeting.
97 6. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so. 7. The chairperson of the General Meeting may accept or reject any form of proxy which is completed and/ or received other than in accordance with these notes and instructions, provided that the chairperson is satisfied as to the manner in which the shareholder wishes to vote. 8. The appointment of a proxy shall remain valid until the end of the meeting contemplated in this appointment. 9. Joint holders – any such persons may vote at the General Meeting in respect of such joint Stellar Capital shares as if he were solely entitled thereto; but if more than one of such joint holders are present or represented at the General Meeting, that one of the said persons whose name stands first in the register in respect of such Stellar Capital shares or his proxy, as the case may be, is alone entitled to vote in respect thereof. 10. Shareholders who hold Stellar Capital shares that have been dematerialised, and are registered by the CSDP on the sub-register in their own name kept by that CSDP (“”own name” dematerialised shareholders”), will be entitled to attend the General Meeting in person or, if they are unable to attend and wish to be represented thereat, must complete and return the attached form of proxy to the Transfer Secretaries in accordance with the time specified on the form of proxy. 11. Shareholders who hold Stellar Capital shares through a nominee should advise their nominee or, if applicable, their CSDP or stockbroker timeously of their intention to attend and vote at the General Meeting or to be represented by proxy thereat in order for their nominee or, if applicable, their CSDP or stockbroker to provide them with the necessary Letter of Representation to do so or should provide their nominee or, if applicable, their CSDP or stockbroker timeously with their voting instruction should they not wish to attend the General Meeting in person, in order for their nominee to vote in accordance with their instruction at the General Meeting.
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